Logistics Sector Forecasts Significant Export Demand in Aerospace and Defense Sector Over the Next 5 Years

By  Jitendra Srivastava, CEO of Triton Logistics & Maritime

New Delhi. 14 March 2024. The global logistics sector is poised to witness a remarkable surge in export demand within the aerospace and defense industry over the next five years, fueled by a projected growth rate of 10 to 15% in Aerospace and defense item exports. This is driven by several factors, including efforts to modernize defense, rising tensions between countries, and changing alliances.

In 2023, India allocated a total of $72 billion to its Aerospace and defense budget, a significant portion of which, specifically $20 billion, was designated for the procurement of domestically manufactured weapons and military platforms. Moreover, Ministry of Defence has set a target of achieving a turnover of USD 25 billion (INR 1.75 Lakh Cr) in aerospace and Defence Manufacturing by 2025, which includes exports of INR 35,000 Cr. Till April 2023, a total of 606 Industrial Licenses have been issued to 369 companies operating in these Sector. This allocation underscores India’s strategic objective of fortifying its indigenous arms industry. Notably, the country experienced a notable surge in its defense production, with a 15% increase observed from $11.8 billion in 2021 to $13.6 billion in 2022.

India, with the third-largest armed forces globally, is leading the way in meeting the growing demand for exporting aerospace and defense products. With ambitious plans to enhance its aerospace and defense capabilities and achieve self-reliance in manufacturing, India’s defense sector is set for substantial growth. The “Aatmanirbhar Bharat” (self-reliance) initiative, introduced by Honorable Prime Minister Narendra Modi, aims to reduce dependence on defense imports and boost local manufacturing. As part of this effort, India’s Ministry of Defense has introduced strategic lists for indigenous production of defense equipment, marking a significant shift. This initiative will not only boost these sector but also help other sectors and logistics is one of them.

The recent announcement of India’s fourth indigenization list, featuring 411 strategically important items, highlights the country’s dedication to nurturing a robust defense manufacturing ecosystem. This move is expected to significantly increase domestic production and open up opportunities for higher exports of aerospace and defense products. Additionally, with an estimated growth rate of 10 to 15% in aerospace and defense exports, India’s defense sector is poised to become a major driver of economic growth and export earnings.

The implications of India’s defense indigenization drive extend beyond its borders, presenting lucrative opportunities for international stakeholders, including logistics companies. As India seeks to procure advanced defense technologies and equipment, there is a growing demand for efficient logistics solutions to facilitate the transportation and delivery of these items. This presents an opportunity for logistics companies to capitalize on the burgeoning export demand in the aerospace and defense sector and expand their footprint in the global market.

According to the International Trade Administration data the aerospace and defense industry showcased impressive performance, with exports contributing around 83% to its turnover. Civil sector revenues accounted for about 69% of the total. Notably, orders surged by 68% in 2021 compared to the previous year, signaling strong demand and market confidence. These trends underscore the industry’s resilience and growth potential amidst evolving global dynamics.

Furthermore, India’s strategic partnerships and defense cooperation agreements with key allies, including the Malaysia, Iran and United States, are expected to further fuel export growth in the aerospace and defense sector. The anticipated growth in defense item exports presents a significant opportunity for logistics companies to diversify their service offerings and tap into new revenue streams. By leveraging innovative technologies and adopting efficient supply chain management practices, logistics firms can position themselves as trusted partners in facilitating the export of aerospace and defense items.

In conclusion, the logistics sector is poised to play a pivotal role in supporting the anticipated growth in export demand within the aerospace and defense industry over the next five years. With India’s ambitious defense modernization plans and strategic partnerships with key allies, coupled the outlook for the aerospace and defense logistics sector is exceedingly promising. By capitalizing on this growth trajectory and offering tailored logistics solutions, companies can unlock new opportunities for expansion and contribute to the overall success of India’s defense indigenization efforts.

( Jitendra Srivastava is the CEO of Triton Logistics & Maritime. The views in the article are solely the author’s. He can be contacted at editor.adu@gmail.com).