India's Defence Exports Poised to Exceed Targets, Private Sector to Lead

India's defence exports are on track to significantly overshoot government targets, and the smartest money may not be where most investors are currently looking, according to veteran market expert Sunil Subramaniam.

Speaking on ET Now, Subramaniam said he expects India's defence export numbers to reach ₹60,000–65,000 crore by 2030, well ahead of the government's official target of ₹50,000 crore by FY32. "That 50,000 crore number could be achieved by 2028 itself," he said.

Why private beats public in defence

The popular entry point for most retail investors is the Nifty Defence Index. Subramaniam's advice: look past it.

"The Nifty Defence Index is heavily loaded in favour of the public sector, which is more into traditional arms and ammunition," he said. "But the age of drones and UAVs — these are things where the private sector has been innovative and is coming up very strongly."

Operation Sindoor, he noted, was a visible demonstration of just how capable Indian private defence startups have become. The implications for exports are significant.

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The global shift away from putting soldiers on frontlines, driven both by political pressure and battlefield inefficiency, is creating massive demand for drone technology, both offensive and defensive. India's private startups, already battle-tested domestically, are positioned to meet that demand.

Gulf nations are among the most motivated buyers. "They were really unprepared for the Iran attack and are now double-fast trying to build up a base for future attacks," Subramaniam said. "We have very good relationships with the Gulf countries, so I expect that to act as a big boost."

Watch the IPO pipeline

Subramaniam's most actionable call was around upcoming IPOs. He urged investors to keep cash ready rather than only buying existing listed names.

"These companies are going to need funding. Given the long gestation cycle of defence products, they will need equity capital to a significant degree," he said. "I expect the IPO pipeline over the next year to year-and-a-half to have a lot of defence-related startups from the private sector."

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His view on large PSU defence stocks: valuations are already high and well-discounted. When new IPOs arrive, investors in existing names may rotate out, creating headwinds for the incumbents.

His advice overall : Take a staggered approach, stay long-term, and watch for new names.

Pharma: The better dollar play right now

Shifting to pharma, Subramaniam was broadly positive, calling it a better dollar play than IT in the current environment. Despite the rupee's recent short-term strength, driven by RBI intervention measures, he expects medium-term depreciation to benefit export-heavy pharma companies.

He pointed to three tailwinds: a likely return of FII flows into pharma as a safety allocation, product-specific opportunities particularly around GLP-1 generics like Ozempic, and the continued strength of the CDMO segment. Domestic healthcare, hospitals and diagnostics, also earned his optimism.

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The one risk he flagged: potential US tariff pressure under Section 232 or 124 provisions targeting low-cost labour advantages. "But they are heavily dependent on Indian generics to support public healthcare. I don't think they will go out and remove that," he said.

On Jio vs Bharti: Not a telecom fight

On the anticipated Jio IPO, Subramaniam said investors shouldn't evaluate it as a straight telecom comparison with Bharti, a battle he believes Bharti would win clearly. Jio's valuation case, he argued, will be built around its positioning as an AI and platform play, broader than telecom, and the market will likely buy that story.

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