Defence: A Critical Need for India

Over the last 3 decades, we have witnessed one of the most peaceful periods in human history. This changed in 2021, post the onset of the still ongoing Russia-Ukraine conflict. Recent geo-political tensions globally have compelled nations to have a relook at their defence capabilities and enhance them going forward.

For India, defence is all the more critical owing to its geography and history. India shares its land borders with seven neighbouring countries, including Pakistan, China, Afghanistan and has a coastline which extends over 7,500 km. More importantly, India’s history is replete with conventional wars and unconventional conflicts (terror attacks). Hence, it is not surprising that India’s defence expenditure has been increasing in sync with nominal GDP growth (~2.5%-3% of GDP).

This does provide an investment case for Indian defence companies, which are expected to benefit from this trend of indigenization of defence, along with promising export potential.

Why invest in Defence companies?

Defence expenditures have been stable as a % of GDP and defence capex can grow in sync or closer to nominal GDP growth. India’s strong economic growth and geopolitical considerations support runway for Indian defence expenditure

Strong indigenization push led by favourable policies

R&D focus to help tap global export potential

Indian defence companies display strong orderbook and growth potential

HDFC Defence Fund, which invests at least 80% of its Net Assets in equity and equity related instruments of defence and allied sector companies, presents a viable investment avenue for investors looking to invest in this space. NFO runs from 19th May to 2nd June.

To know more, please check the detailed scheme presentation

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.