NFO Alert: Motilal Oswal AMC Launches Nifty India Defence Index Fund; Closes On 24th June

The first index fund in India to provide exposure to Indian-listed defence firms is the Motilal Oswal Nifty India Defence open-ended Index Fund, which has just been introduced by Motilal Oswal Asset Management Company ('MOAMC') on Wednesday. The fund seeks to give investors a chance to participate in the defence sector to grow their potential returns. The fund replicates and tracks the overall performance of the Nifty India Defence Index. June 13, 2024, is when the NFO begins, and June 24, 2024, is when it closes.

As of May 31, 2024, the Nifty India Defence Index had a 1-year and 3-year compound annual growth rate of 177% and 89.5%, respectively.

Prateek Agrawal, MD & CEO, Motilal Oswal Asset Management Company Ltd said, "India's strides towards Atmanirbharta (Self-Reliance) in defence is paving the way for significant growth and innovation. With the Motilal Oswal Nifty India Defence Index Fund, we aim to capitalize on the projected $100 billion to $120 billion expansion in the defence sector over the next six years. As the fourth largest defence spender globally, India's focus on self-reliance and modernization offers substantial opportunities for domestic defence companies. This fund is poised to benefit from India's robust advancements in defence technology and infrastructure."

Pratik Oswal, Chief of Business Passive Funds, Motilal Oswal Asset Management Company Ltd said, "Since the Covid era, the Nifty India Defence TRI Index has outperformed the Nifty 50 TRI four times in the last six calendar years. This is the outcome of the government's unwavering concentration on fostering bilateral ties between nations in order to boost exports and lower imports as a part of strategic changes in government policies. As a result, India's capabilities in the manufacturing sector is growing at a rapid pace. Made in India initiatives have resulted in a notable 74% increase in FDI flows, which is driving the defence sector's expansion. Investors seeking long-term capital growth with returns commensurate with the performance of the Nifty India Defence Total Return Index can consider the Motilal Oswal Nifty India Defence Index Fund, an open-ended fund that replicates and tracks the Nifty India Defence Total Return Index subject to tracking error. We look forward to greater allocation to the defence budget in 2024 as well"

For the Motilal Oswal Nifty India Defence Index Fund, the minimum application amount is Rs. 500, and amounts after that are in multiples of Rs. 1. Subject to tracking error, the investment goal of the Motilal Oswal Nifty India Defence Index Fund is to generate returns that, before expenditures, match the total returns of the stocks indexed by the Nifty India Defence Total Return Index.

Motilal Oswal AMC said according to market experts, companies in this sector have improved their balance sheets and also their profitability through the continued increase in exports and increase in defence expenditure by the government. This makes investing in the India Defence Index Fund an attractive investment proposition.
Nomura study believes that the defence sector in India has a USD 138 billion pipeline between FY24 and FY32F, indicating a substantial opportunity for the sector. The government is additionally aggressively working to boost exports of defence-related goods and services, which Nomura Research predicts will double in the next three to four years.

The Indian government has imposed an import restriction on over 4600 defence products by December 2027 in an effort to cut imports and boost domestic defence production in India in the pursuit of "Atmanirbhar Bharat".