Krishna Defence SME Outlier Journey

Capital Goods & Engineering Industry Overview

The note links defence and shipbuilding activity to Indian Navy fleet expansion, defence acquisition approvals, shipyard investment and government support for the maritime ecosystem. It also describes how warship construction includes hull, propulsion and weapon systems, with weapon systems representing the largest share of total costs and a substantially greater share than in commercial vessels.

• Navy fleet and orders: In 2023, the Indian Navy aimed to have 175 warships by 2035, compared with approximately 132 at the time. As of late 2023, 68 warships and vessels were on order, with an estimated value of approximately ₹2 Lakh Crore.
• Defence acquisition approvals: During FY22–25, the Defence Acquisition Council approved INR 8.45 trillion in defence acquisitions, described as a 3.3x increase over the preceding three-year period.
• Navy budget share: The Navy’s combined revenue and capital allocation was 15.36% of Defence Services Estimates in 2020-21 and 21.06% in 2025-26. Its capital share was 8.26% in 2020-21 and 13.29% in 2025-26.
• Shipyard capacity investment: The note describes planned investment at Mazagon Dock Shipbuilders and Cochin Shipyard, and a Garden Reach Shipbuilders & Engineers target to build 28 vessels concurrently by FY25.
• Maritime policy support: A package of INR 69,725 crore was approved in September 2025 to support the shipbuilding and maritime ecosystem. It includes assistance for shipbuilding, capacity development, financing and infrastructure status for large ships.
• Warship cost composition: Warship costs are grouped into hull, propulsion and weapon systems. The report’s chart shows equipment at 55%, labour at 15%, steel at 20% and profit margins at 10%.

Government Support and Shipyard Expansion

The report cites a comprehensive package approved in September 2025 to revitalise shipbuilding and maritime activity. The Shipbuilding Financial Assistance Scheme has a corpus of ₹24,736 crore and validity up to 31 March 2036; the Shipbuilding Development Scheme has an outlay of ₹19,989 crore and aims to increase annual capacity to 4.5 million Gross Tonnage (GT).

• Maritime Development Fund: The approved ₹25,000 crore fund comprises a Maritime Investment Fund of ₹20,000 crore, with 49 per cent government participation, and an Interest Incentivization Fund of ₹5,000 crore.
• Shipyard plans: Mazagon Dock Shipbuilders’ approximately ₹4,000 – ₹5,000 Crores capex plan includes a new ship repair yard and a partnership with the US Navy for repairs. Cochin Shipyard’s approximately ₹2,500 – ₹3,000 Crores plan includes upgrades and a new dry dock. Garden Reach Shipbuilders & Engineers planned to expand capacity to build 28 vessels concurrently by FY25.

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11-Feb-2026 SEBI Registered RA: INH000018896