Athira Sethu
Kochi, 18 Sep 2026
HSBC is optimistic about the future of India’s defence sector. The brokerage has already initiated coverage on seven defence stocks and has identified strong long-term prospects for the industry.
First of all, the Indian government is increasingly concentrating on developing domestic defence manufacturing. For decades, India has relied heavily on foreign suppliers of weapons, equipment and technology. The government now actively encourages domestic companies to produce their defence equipment.
The bank forecasts high growth of defence expenditures over the coming years. Government spending on the sector could lead to the receipt of orders by Indian defence companies in segments of fighter aircrafts, missiles, submarines, drones, missile defence systems and defence electronics.
Secondly, HSBC expects the development of the country’s defence manufacturing industry. According to HSBC, there is a record number of domestic defence manufacturing and a significant share of defence capital expenditures is devoted to the purchase of domestically produced equipment.
Moreover, HSBC also expects strong growth prospects for India’s defence exports. Over the past decade, the defence exports of the country grew substantially. There are plans to further increase the exports in the coming years. The participation of private companies could help in this.
This firm sees a benefit to India defence firms due to increasing order books. More orders, increased domestic production, and increasing exports will contribute to growth over several years.
The HSBC firm also sees India as gradually emerging as an important defense manufacturing and exporting nation. This industry is growing in many areas including aerospace, defense electronics, missiles, unmanned systems, and naval defense.
However, HSBC also pointed out some risks. Defense firms might find it hard to translate new orders into revenues due to the time needed to produce and deliver equipment. Supply chain issues and shortages of imports could also create some delays.
Finally, HSBC observed that there are high expectations for growth, which implies that firms have to execute their orders well.
In conclusion, the optimistic stance by HSBC is primarily attributed to increased defense budgets, local manufacturing, export growth, private sector involvement, and high demand for defense equipment in India.
