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The Indian Defence Sector and its Endeavour to soar the skies

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Aero India 2023 – India’s runway to strengthening defence

On February 13, the largest iteration of the five-day Aero India event opened at the Air Force Station in Yelahanka, Bengaluru.

Aero India aims to showcase India’s expanding aerospace and defence capabilities under the theme “The runway to a billion opportunities”. On each of the five days, flying shows are also scheduled. Even though Aero India is an exhibition event, Union Defense Minister Rajnath Singh has said that it also seeks to improve India’s relations with foreign nations, doubling up as a business event.

The purpose of the event is to increase international cooperation and investment in India’s defence manufacturing capacity. The event will feature homegrown machinery and technology in an effort to promote collaborations with foreign companies.

Participants in Aero India ’23 include defence and manufacturing companies like Airbus, Boeing, Dassault Aviation, Lockheed Martin, Israel Aerospace Industry, BrahMos Aerospace, Army Aviation, HC Robotics, SAAB, Safran, Rolls Royce, Larsen & Toubro, Bharat Forge Limited, Bharat Electronics Limited (BEL), Bharat Dynamics Limited (BDL) and BEML Limited.

How has the Indian Defence Sector been Performing?

The scale of Aero India instills confidence in India’s efforts to bolster defence and related manufacturing capabilities. It begs us to ask the question; How has India’s Defence Sector performing and what does could it look like moving forward?

We believe there is still more momentum in the defence sector, which has seen impressive stock gains because of strong order books and a rising earnings quality.

The government has implemented a number of support programmes and policies that have led to a consistent flow of funding and investment possibilities in the industry. According to the Make In India website, the total amount of FDI that entered the defence sector from April 2000 to September 2022 was $15.71 million. Prior to 2020, the government raised the FDI cap in the defence sector from 49 percent to 74 percent via the automatic method and up to 100 percent via the government route.

The Budget 2023 has allocated Rs 5.94 trillion for defence and related services for FY24, up 13 per cent from the budgeted estimate of Rs 5.25 trillion in FY23. The total capital outlay is Rs 1.62 trillion, an increase of 16 per cent over the previous fiscal year’s budgeted allocation of Rs 1.52 trillion.

Take the Omni Bharat Defence smallcase by Omniscience Capital as an example, it has given a return of 79.23% in the last one year (data as of 17th February 2023).

Omni Bharat Defence smallcase by Omniscience Capital

The future of the Indian Defence Sector looks bright but how it turns out is something that we’ll have to wait and see.

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The Indian Defence Sector and its Endeavour to soar the skies
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