India Defence PSUs Growth: India is looking to increase how much it spends on defence, and it could go up a lot in the coming years. Right now, the country spends about 2% of its total income, called GDP, on defence. But over the next 10 years, that number might go up to 3% or even 4%. This change means India’s defence budget could become more than $300 billion, or about Rs 30 lakh crore, once the GDP reaches $10 trillion. Experts believe this would mean the defence budget would grow around 16% to 17% every year until 2035, reports Ommcom News.
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The report also said that Operation Sindoor has made India more serious about safety and security. It’s not just about protecting the borders anymore. The country wants to protect its people, resources, trade areas, and also the online world. Because of this, India is focusing more on being ready to act quickly and keep the country safe from enemies.
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India’s defence companies that are owned by the government are also going to see big changes. These companies, called defence PSUs, are expected to grow fast. Their total work output is likely to become Rs 1.8 lakh crore by 2029, which would mean an 18% growth over the next four years.
These PSUs already contributed Rs 1.1 lakh crore out of the Rs 1.4 lakh crore defence goods made in the country in the financial year 2025. From this, Rs 90,000 crore came from the eight PSUs that are listed on the stock market, making up 66% of what all defence PSUs made.
By 2029 India is aiming to reach Rs 3 lakh crore in home-made defence goods. The report even said this target might be crossed or raised later on. The eight listed defence PSUs might grow by 18% in 2026 and then by 22% in 2027, based on what experts believe. Even the nine PSUs that are not listed on the stock market are expected to report total sales of over Rs 20,000 crore in the year 2026.
On long term one big expense in the defence budget is pensions. They take up about 25% of the whole defence budget and are the biggest part of what goes into salaries. Right now, this part costs around Rs 2 lakh crore. But this expense is expected to grow more slowly in the future.
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While on the other hand, the money spent on buying equipment and making new defence supplies is likely to grow faster maybe more than 20% every year. All of this means that India could spend between Rs 50 lakh crore and Rs 64 lakh crore on defence over the next 10 years, depending on how much the defence budget goes up as a part of the GDP.
There is no doubt that the defence industry in India is growing strong, and it could keep growing for many years. The total size of the market is big, and growth rates are expected to stay high. But even though there is a lot of potential, people who want to invest in defence stocks should be very careful. The prices of many of these companies are already high.
The average price-to-earnings (P/E) ratio of the eight listed PSUs is now 57. For the coming years FY26 and FY27, the forward P/E is expected to be 45 and 36. This means that a lot of the expected growth is already included in the current prices. Some private defence companies have even higher P/E numbers, which makes it more risky for investors to put their money in without careful thought.
