India’s defence sector could be entering a fresh phase of structural growth, with rising domestic defence spending creating a large addressable opportunity for listed defence companies.
Jefferies estimated that India’s domestic defence capital spending could grow at a 16% CAGR between FY26 and FY30, compared with a 10% CAGR for overall defence capex. The brokerage sees a $60 billion-plus domestic defence opportunity over four years, while defence exports are expected to grow at an 11% CAGR to ₹584 billion by FY30.
“We believe India defence spend should see a double-digit CAGR in the medium-term in the background of global geopolitical tensions,” said the brokerage
Another key pillar of the brokerage’s bullish on the defence sector view is the improving credibility of Indian-made defence equipment in international markets. Jefferies pointed to the operational validation of systems such as Akashteer and BrahMos during Operation Sindoor, arguing that battlefield deployment could strengthen India's credentials as a defence exporter.
Jefferies expects defence exports to rise 11% annually through fiscal 2030, reaching ₹584 billion, and has identified 5 stocks that can potentially perform well in the coming quarters.