The Indian Aerospace and Defence (A&D) sector is expected to reach USD 70 billion by 2030. The new growth standard is due to technological collaboration, an emphasis on manufacturing, and the government's strong push to develop an Aerospace and Defence ecosystem in India.
Today, India is gradually becoming a manufacturing hotspot to manufacture aerospace-related parts and assemblies that are used in numerous commercial and defence aircraft and helicopters.
India has allotted USD 72.6 billion to the Defence Research Development Organisation (DRDO). As an area in which India invests heavily, the Union Budget for Fiscal Year 2023-24 includes a 13.1 per cent rise in defence research and development (R&D) spending. With increased defence spending, the South Asian country to invest in additional military equipment and other capabilities to become self-sufficient in crucial defence technology and systems.
India is also investing money to try to speed technological development, such as India's first indigenous aircraft carrier, the INS Vikrant (IAC-1). The need to upgrade the country's aged military gear to offer appropriate security against possible hostile acts by changing global combat circumstances is driving this investment.
The allocation for defence in India's Union Budget 2023 has been increased by 12.5 per cent over last year to Rs 5.94 lakh crore for 2023-24 from Rs 5.25 lakh crore. The government has budgeted Rs 1.62 lakh crore as capital outlay for the procurement of new military equipment, representing a 7 per cent increase over the current fiscal's capital budget of Rs 1.52 lakh crore.
Many massive military projects are currently in the works, including the acquisition of fifth-generation Advanced Medium Combat Aircraft (AMCA), Twin Engine Deck-Based Fighter (TEDBF), Tejas MK2 and a vital design and development programme for an aero engine. The Indian Navy's purchase plans include 27 fighter jets for the INS Vikrant, an indigenously manufactured aircraft carrier.
Changing India’s Defence Landscape
Today, India accounts for 3.7 per cent of global military spending, placing it third in the world after the United States and China. It also has the world's second-largest military force, with 14 lakh active personnel and 13 lakh reserve personnel spread among the Indian Army, Navy, and Air Force. Defence spending accounts for almost 2.4 per cent of GDP.
India's military manufacturing sector is developing, with established and new firms of varying sizes preparing to exploit lucrative opportunities in the defence and aerospace industries that they have been anticipating for years.
Simultaneously, the government is taking aggressive steps to enhance domestic purchases. The MoD previously produced three positive indigenisation lists, totalling 310 goods that must be sourced domestically and have at least 50 per cent domestic content.
CEO and Co-founder of Posspole, Kiran Rudrappa said that India’s defence startups have made significant contributions to the country's quest for self-reliance in defence manufacturing under the “Atmanirbhar Bharat” programme in 2023. These startups are increasingly successful, engaging in the development of advanced technologies such as unmanned aerial vehicles, surveillance, inspection, intelligence and cybersecurity systems, Rudrappa added.
India's Emerging Drone Industry
With roughly USD 50 million in investments, the current fiscal year is shaping up to be the strongest year yet for India’s fledgling drone industry.
Drone start-ups received USD 49.7 million in funding across 20 rounds in FY 2022-23, compared to USD 25 million in funding across 23 rounds in FY 2021-22. According to Tracxn Technologies data, the number for FY 2020-21 was USD 11.2 million spread across 20 rounds. Thus, investments in the segment have registered 300 per cent growth in the last three fiscals.
CEO of Skye Air, Ankit Kumar said that the industry witnessed an unprecedented surge in the adoption of drone technology across various industries in India this year. This significant trend aligns seamlessly with the dynamic demands of the Indian market, setting the stage for an even more promising future, Kumar added.