Icra defence revenue: India’s defence industry is expected to grow fast in the coming financial year. A new report from Icra says the sector could see its revenue go up by 15 to 17% in 2025–26. This growth is mostly because of strong order books good execution of current projects, and the government’s push to buy more from Indian companies. The order book is already strong, and at the end of 2024-25, it stood at 4.4 times the yearly income, which means there’s a lot of work already lined up for the companies to complete next year.
The report says companies working in land systems, naval systems, aircraft, weapons, and ICT (information and communication tech) will all benefit from the government’s support. Suprio Banerjee from Icra said that entities across these verticals are expected to benefit from continued budgetary support and localisation efforts, which will boost order inflows and execution. The government is spending more and encouraging Indian firms to build defence products inside the country instead of importing them, and that is pushing this growth forward.
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Strong Margins and Growing Local Production
Icra also said the defence industry should be able to keep its operating margins high, around 25-27% in the next financial year. This is because of more local manufacturing, bigger scale of work, and a shift in focus. Instead of just putting together parts, Indian companies are now building full systems. This change adds more value and helps them earn better profits.
The ‘Atmanirbhar Bharat’ mission is playing a big part in helping the defence industry grow. Because of this, India now buys more weapons and equipment from its own companies. Back in 2017, only 61 percent of defence purchases came from Indian vendors, but by 2025, that number is expected to reach 75%. Along with that, India’s defence exports have grown really fast too. In just a few years, exports went up 15 times. Between 2017 and 2025, exports touched Rs 23,622 crore, growing at a rate of 41% every year, reports TOI.
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Some Problems Remain
The central government has been putting more money into defence year after year. In the last five years, the budget for capital spending in defence went up steadily at a rate of 8.29% every year. For the year 2025-26, the defence budget has reached Rs 1.92 lakh crore, which is the biggest yet. This shows that the government is serious about making India strong in defence, both for itself and to export to other countries.
Even tho defence companies are seeing good profits and rising revenues from 2015 to 2025, the Icra report pointed out that not everything is perfect. Private companies, especially, are still finding it hard to manage their working capital. This means they sometimes don’t get paid fast enough or face delays in handling their day-to-day cash.
