ExailIndia is presently the second-highest military spender after China in the Asia-Pacific region with a total defence budget of $74 billion in 2023. The cumulative defence spending of the country is projected to touch $445.7 billion from 2024-28, out of which the acquisition budget share is estimated to be approximately 28%, amounting to $123.2 billion, forecasts GlobalData, a data and analytics company.

GlobalData’s latest report, “The India Defense Market Size and Trends, Budget Allocation, Regulations, Key Acquisitions, Competitive Landscape and Forecast, 2023-28,” Australia Defence Market Size and Trends, Budget Allocation, Regulations, Key Acquisitions, Competitive Landscape and Forecast, 2022-27’ reveals that the country’s increasing military expenditure makes it one of the most lucrative defence markets in the word. The country’s acquisition expenditure, which recorded $19.7 billion in 2023, is anticipated to grow at a CAGR of 5.9% to reach $27.4 billion in 2028.

Abhijit Apsingikar, Aerospace & Defense Analyst at GlobalData, comments: “The Indian defence budget is majorly driven by the need to acquire next-generation technologies to facilitate the expansion of the indigenous defence manufacturing industrial complex. Furthermore, increased focus on armed forces equipment modernisation programs along with the creation of Integrated Battle Groups (IBGs) to counter the rapidly evolving regional security scenario is anticipated to drive the investments in the Indian defence sector.”


Over the period 2018-23, India has sanctioned several defence deals to modernise its inventory and has started reserving a significant part of the budget for the procurement of indigenous defence equipment. In continuation of the trend, the FY23 budget reserved about 75% of the defence acquisition budget to fund the procurement from domestic enterprises.

Apsingikar continues: “Although, the reservation of defence acquisition funding for domestic procurement impacts the prospects of the outright procurement of imported equipment, the liberalisation of defence sector now allows as much as 74% foreign direct investment (FDI) through automatic route and up to 100% through government approval. As such, foreign OEM’s now have the option of either partnering with local companies or to setup fully owned subsidiaries to operate within the Indian defence sector.”

India’s Bharat Heavy Electricals Limited (BHEL) had finalised an agreement with Ukrainian Zorya-Mashproekt to license manufacture marine gas turbine engines within the country in 2021. However, the Russia-Ukraine war in 2022 had led to the disruption of critical spares and components which were previously sourced from Ukraine.

It is anticipated that the European and US gas turbine manufacturers are likely to exploit the opportunities arising out of these geopolitical developments. Several other weapons procurement and upgrade programs such as the S-400 air defence system and Su-30MKI modernication have also been impacted. These factors have compelled Indian Armed Forces to reduce the reliance on imports and replace them with indigenous systems soon.

Apsingikar concludes: “India not only spends a large portion of its defence budget for the acquisition of modern platforms and development of domestic defence industry but also focusses on imparting comprehensive training to enhance operational effectiveness, tactical decision decision-making, and other mission-critical elements. With the new ‘Agneepath–Tour of Duty’ program implemented in 2022, the Indian military is anticipated to reform its personnel recruitment process.”

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