Pre-Budget Expectations: Amey Belorkar, Fund Manager, IDBI Capital Markets & Securities Ltd.

We anticipate that Budget for FY 2025-26 will be pivotal in accelerating India’s journey towards self-reliance in the defence and aerospace sectors, both of which are on the brink of significant growth. The government’s emphasis on Atmanirbhar Bharat and Make in India is likely to be bolstered by strategic budgetary allocations that promote innovation, support MSMEs, and streamline defence procurement processes. A particular focus on emerging areas such as unmanned aerial systems (UAS), advanced materials, cyber defence, and space technology could unlock substantial opportunities for private capital engagement.

The burgeoning space tech industry, driven by advancements in satellite development, launch capabilities, and space exploration, offers significant potential for innovation and investment. 

In line with the government’s indigenization drive, we foresee a projected growth of 15-20% in the defence sector, propelled by supportive budgetary measures, incentives for private sector involvement, and a robust push for indigenous manufacturing. The government’s planned introduction of a new scheme focused on R&D in deep-tech technologies, such as AI, robotics, and advanced weapon systems, is expected to further catalyze innovation and development within the sector. Initiatives targeting the modernization of India’s armed forces, along with anticipated attention on Defence Industrial Corridors and production-linked incentives (PLIs), are set to provide crucial momentum for the sector’s expansion.