New Delhi: The Indian defence industry has seen a significant hike in share prices on Tuesday with the government approving of nearly $11 billion in fresh military acquisition. The BSE India Defence Index rose by as high as 2.1% to post its biggest gain in a fortnight led by gains in Hindustan Aeronautics Ltd. (HAL) and Bharat Electronics Ltd. (BEL).
The Defence Minister, Rajnath Singh, led a meeting on Monday of the Defence Acquisition Council (DAC), the highest adquisition decision making board, which gave its approval. This represents a combined value of the cleared proposals is about ₹1.10 lakh crore or approximately $11 billion.
The items in the purchase list include everything from the army, navy and air force. New helicopters, vehicles capable of driving in harsh environments, special trucks for chemical and radiation detection, mine laying systems and bridge building systems are all set to be delivered to the Army alone. The new vehicles will allow Indian forces to efficiently detect and deal with any chemical, biological, radiological and nuclear (CBRN) threats, officials said.
Among the lesser talked about items is new smart ID card system for the military. It will replace paper passes and permit with electronic cards, which will speed up security checks at military bases.
However, what grabbed the investors’ attention most was the government’s intention to purchase nearly all of this equipment from Indian companies as opposed to foreign ones, about 98%. This is in line with India’s effort of reducing their dependence on foreign arms suppliers and strengthening their own arms industry in the long-term.
The stock market had a response to this news. HAL stocks went up by almost 3%, BEL by over 1.5% and BEML by just under 4%. Other smaller defense companies, such as Data Patterns and Bharat Dynamics, also reported gains. Analyst at Jefferies joined in the positive sentiment by raking in some positive comments on these companies.
Notably, it is a “first” approval. There will be additional rounds of review before contracts are actually signed and the funds may be disbursed over several years.
This latest approval comes amid a much larger defence procurement budget of India for the fiscal year 2027, which has been set aside at around $19.6 billion.
