Bubble in defence and drone stocks?
a heat map for defence stocks. So, are defence stocks in Indiacurrently overvalued? To understand this, let's take a look at Israel. When the state of Israel was founded, the country desperately needed trading partners.
Unlike its Arab adversaries, Israel did not have oil or natural resources to fund its economy. Plus, the country needed to get self-sufficient in defense. The country's military exports were then nowhere close to where they are today.
Israel took its military technology seriously only when its attempts to export produce like oranges and kerosene stove tops to South America completely failed. But the country's focus on military R&D paid off. Almost 17% of the US' R&D budget is allocated for the military.
The US military's wartime R&D gave birth to pathbreaking technologies like the internet. In the case of Israel the share of military R&D is almost 5% of its total R&D. So, did this help? Well, since 1985, Israel is the world's largest exporter of drones.
It corners about 60% of the global market. With US$ 11 bn in global arms exports, Israel is trailed by the US, whose market share is under 25%. Its customers are everywhere - Russia, South Korea, Australia, France, Germany, and Brazil.
Israel's drones were used by India to safeguard its border during China's Doklam intrusion. Over the past few decades, Israel has shown the world how technologically advanced military hardware can change the way modern wars are fought. Can India's military exports do the same? India's indigenously produced BrahMos missiles bagged $335 m order from the Philippines last year.
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