Defence Can Be India's Next Auto-Like Success Story, Says Raamdeo Agrawal | Profit Exclusive

India is on the cusp of becoming a major global force in defence manufacturing, much like it has done in the automobile sector, according to Raamdeo Agrawal, chairman and co-founder of Motilal Oswal Financial Services Ltd.

In an exclusive conversation with NDTV Profit, Agrawal emphasised that India should focus on building indigenous defence capabilities, which not only serve domestic needs but also open up opportunities in the global export market.

Hero MotoCorp and Hero Honda helped develop India’s two-wheeler industry, and Maruti bought the mini car to India. With time, the sector soon became completely self-sufficient and has now started exporting, he explained. Similarly, defence can follow the same path, according to the chairman.

Currently, most of the world's defence production is concentrated in a handful of countries such as the US, China, Russia, and some European nations, Agrawal pointed out. “What about the smaller countries?" They will need affordable and reliable defence equipment—and that’s where India can step in, he noted.

Agrawal stressed that India is now the third-largest force in defence after the United States and China, both in terms of military strength and strategic presence.

However, he cautioned that inconsistency in procurement and lack of visibility in defence orders can hurt private sector suppliers.

“The moment war-mongering goes down, defence procurement slows, and that’s not good for private players. They want clear visibility of orders,” he said.

He cited examples where defence companies posted strong profits one year, only to face uncertainty the next due to order delays or rollovers.

On the broader economy, Agrawal is upbeat. India’s economic potential is rising steadily, driven by its sheer scale and population base. “The potential of the economy is definitely going up,” he stated, adding that trade flows will be a key driver of GDP growth going forward. “There’s almost a one-to-one correlation between trade flow increases and GDP expansion." Once trade picks up, growth will accelerate, he said.

Agrawal also flagged the positive implications of lower oil prices for India. If crude oil stabilises in the $65–70 per barrel range in the coming years, he believes it could be a game-changer.

“If this theory plays out, it will be anti-inflationary, the rupee will be stable, and many of India’s economic challenges will ease. The RBI will have a lot more flexibility,” he said.