Private defence firms to continue double-digit growth in FY26: Crisil Ratings

Private defence companies in India are projected to post 16-18% revenue growth in FY25, supported by robust domestic demand and rising investments, according to Crisil Ratings. This builds on a strong 20% compound annual growth rate (CAGR) recorded between FY22 and FY25. The expansion is driven by significant government policy support, which has attracted private capital into the sector, particularly in research and development (R&D) and capital expenditure. These investments have enhanced private players’ technological capabilities and competitiveness, enabling them to secure larger contracts in an industry traditionally dominated by public sector undertakings. With growing emphasis on indigenisation and self-reliance, private companies have been steadily increasing their share in India’s defence market.

Crisil highlighted that order books are likely to rise to Rs. 55,000 crore (US$ 6.2 billion) by FY26 from Rs. 40,000 crore (US$ 4.51 billion) at the end of FY24, aided by government initiatives such as Atmanirbhar Bharat, the Defence Acquisition Policy, and the Defence Production and Export Promotion Strategy. Key demand segments include electronic warfare systems, C4 (command, control, communications, computers, and intelligence) systems, and aerospace equipment. Strong operating performance and a healthy pipeline are expected to drive capacity additions and sustained R&D investments, with companies projected to spend Rs. 1,000 crore (US$ 112.66 million) each on capital expenditure and incremental working capital in FY26. Most of this funding will be met through internal accruals, keeping debt levels stable. At the same time, order inflows under the Emergency Procurement Plan and buoyant industry demand provide further growth visibility.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.