INDIA'S DEFENCE SECTOR PIVOTS TO INTERNAL CAPEX

India’s defence and aerospace manufacturers are increasingly taking charge of their growth rather than relying solely on major government contracts. With final approvals for several large programmes taking longer than expected, companies are investing heavily in manufacturing capacity, advanced technologies and strategic acquisitions to strengthen their competitive position and capture long-term market share. A pipeline of defence projects worth nearly Rs 5 lakh crore continues to offer substantial growth potential. Key programmes include the 114 Rafale fighters under the Multi-Role Fighter Aircraft programme, valued at around Rs 3.25 trillion, and six P-75(I) submarines estimated at Rs 900 billion. Other major projects awaiting Cabinet Committee on Security clearance include eight Next Generation Corvettes and the Quick Reaction Surface-to-Air Missile system. Once approved and contracted, these programmes could provide manufacturers with significant multi-year revenue visibility. Companies are accelerating investments in capacity expansion and acquiring specialised capabilities to strengthen their market positions. Aerospace manufacturers are directing capital expenditure towards dedicated customer facilities, aero-engine and landing-gear components, specialised manufacturing processes and integrated production ecosystems. These investments aim to increase domestic value addition, deepen technological capabilities and secure a larger role in global supply chains as international original equipment manufacturers diversify their sourcing networks. Defence electronics and drones are also emerging as high-growth segments, supported by rising electronics content across military platforms, accelerating import substitution and expanding export opportunities. A reported Rs 200 billion Fast Track Procurement programme for drones, loitering munitions and related systems could stimulate near-term demand for indigenous technologies.