Defence Stocks in Focus: 18% Capex Push Proposed, ₹75,000 Crore in FY26 Deals Expected

India’s Defence Ministry is ramping up its capital expenditure strategy, with the Defence Secretary pitching for an 18% increase in defence capex and signalling potential additional defence orders worth ₹75,000 crore in FY26, driving domestic defence manufacturing.

₹75,000 Crore in Additional Defence Orders Expected in FY26

Speaking at a Network18 Reforms Reloaded event, Defence Secretary Rajesh Kumar Singh revealed the ministry’s intent to pursue an ambitious hike in defence capital expenditure by 17-18% in FY26. As part of the revised road map, the ministry is targeting an annual capex of $25-30 billion, facilitating the modernisation of the armed forces and acceleration of indigenisation. A ₹30,000 crore procurement for MALE drones is imminent, with further orders for advanced drones and AWACS systems likely totalling ₹75,000 crore in the same fiscal year.

Overall Defence Outlay to Touch 2.5-3% of GDP

Singh further highlighted the recommendation to scale the overall defence budget to 2.5-3% of the national GDP. The strategy includes future announcements on 4.5-generation fighter jet acquisitions to enhance India’s aerial defence capabilities. This funding uplift aims to ensure readiness for sustained conflicts and reduce dependency on foreign suppliers.

Read More: Centre Exempts Customs Duty on 18 Defence Imports Including Aircraft and Missiles!

Focus on Domestic Manufacturing and Private Sector Participation

To reduce reliance on imports, 75% of defence capital expenditure is now allocated for domestic procurement. Singh stressed the importance of forming a robust indigenous ecosystem by empowering private manufacturers, enabling defence startups, and eliminating barriers such as product reservations. While some high-end systems may still require off-the-shelf global buys, the domestic industry is expected to meet most needs either independently or through technology transfer arrangements.

Defence Stocks like HAL, BDL and BEL

Defence stocks such as Hindustan Aeronautics Ltd (HAL), Bharat Dynamics Ltd (BDL) and Bharat Electronics Ltd (BEL) are expected to remain in focus as the government has proposed an 18% year-on-year increase in capital expenditure for defence procurement, with deals worth nearly Rs 75,000 crore anticipated in FY26. 

The push is aimed at boosting domestic manufacturing under the self-reliance initiative, with large orders likely in areas including fighter aircraft, missile systems, and electronics.

Long-Term Vision and Investment Commitment

The Defence Ministry’s long-term vision includes consistent annual investments of $35 billion or more over the next 15 years. This capital infusion seeks to build self-reliance and prepare India for any prolonged strategic challenges, with DRDO and affiliated agencies driving the technology developments wherever readiness permits.

Conclusion

With a committed 18% capex rise and robust order placement in FY26, India is sharpening its defence capabilities. A blend of strategic purchases, domestic production incentives and increased funding signals a self-reliant and conflict-ready defence posture over the coming decade.

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