Defense Expenditure Trends in India 2023

The Ministry of Defense (MoD) develops defense and security policies and oversees their implementation by the armed forces (i.e., Army, Navy, and Air Force). The MoD has been allocated the largest share in the FY2024 budget, accounting for more than 13% of central government spending. The overall proposed spending for FY2024 has increased by 1.5% from 2022-23 revised estimate (RE). The government intends to encourage the domestic defense industry by fostering a conducive environment for doing business.

Market insights:

For FY 2024, the Ministry of Defense (MoD) allocated INR 5,935.38 Bn for the defense expenditure. The budget allocation is focused on increasing the indigenous development of ammunition, sustenance of weapons and assets, military reserves of the armed forces. Throughout time, the Ministry's spending as a percentage of total spending by the government has continuously decreased. A capital outlay of INR 1,713.5 Bn accounts for 27% of the defense budget for FY2024. Investment potential areas in the Indian defense industry for the market players includes opportunities in supply chain, modernization of the armed forces and infrastructure, and research and development.

Defense Budget Analysis

The Indian Army accounts for the largest share (57.47%) of the defense expenses, followed by the Air Force and Navy in the budgetary allocation for the financial year 2023-2024. The Air Force’s modernization costs are anticipated to rise at a 4% yearly rate between FY 2013-14 and FY 2023-24. The funds for the modernization of the Navy rose at a 10% annual average rate between 2013-14 and 2023-24. The Navy's proposed modernization spending is about 2.1% higher for FY 2024, as compared to the spending during FY 2023.

Recent developments:

India based Hawking defense Services (HDS) collaborated with Australia-based Amphibian Aerospace Industries (AAI) to manufacture Amphibious Aircraft. The aircraft to be manufactured can land and take off from land, water, and snow. The partnership includes establishing a manufacturing facility in Tamil Nadu to produce airplane parts and provide MRO services for amphibious aircraft.