Rajnath Singh, who assumed office as Defence Minister on Thursday, announced that the government aims to boost defense sector exports to ₹50,000 crore over the next five years, reaffirming an earlier milestone set by the government.
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Following this development, shares of PTC Industries jumped 20% to touch a new record high of ₹14,930 apiece, while Paras Defence and Space Technologies also jumped 18% to hit a new peak of ₹1,141, while BEML shares gained 13% to reach ₹4,516.95 apiece.
Other defence stocks such as Bharat Electronics, MTAR Technologies, Bharat Dynamics, ideaForge Technology, Zen Technologies, and Astra Microwave Products all gained between 3% and 8%.
Shipbuilding stocks also saw an uptick, with Mazagon Dock Shipbuilders rising 6% in intraday trade, while Cochin Shipyard and Garden Reach Shipbuilders & Engineers jumped 4% and 7%, respectively.
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“PM Modi has given me the responsibility of the Defence Ministry again. Our priorities will be the same, the protection of the country. We want to develop a strong and ‘Aatmanirbhar’ Bharat. We want to become self-reliant on defence manufacturing. We have exported defence equipment worth over ₹21,000 crore. Our target is to take this figure to ₹50,000 crore in the next five years. We are proud of our three-armed forces, the Indian Army, Indian Navy, and Indian Air Force,” Singh said.
The Indian defence sector is undergoing a transformative phase marked by increasing funding, expanding defence budgets, and rising defence exports. In FY23, defence exports surged by 240% over five years, reaching $1.9 billion ( ₹15,918.16 crore).
India now exports to over 85 countries, thanks to collaborative efforts. The government in recent years has given clearance for exports to Friendly Foreign Countries (FFCs), creating substantial growth opportunities for Indian defence manufacturers.
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Earlier, Japanese brokerage firm Nomura highlighted that India’s defence sector presents a lucrative ordering opportunity of $138 billion over FY24–32, driven by escalating demand for defence equipment, technologies, and services. This scenario offers significant prospects for companies involved in defence production and technology development.
The brokerage emphasized that India’s defence capital expenditure is expected to rise to 37% of the total budget by FY30, up from the projected 29% in FY25. This increase translates to a cumulative capital outlay of ₹15.5 trillion over FY24–30, indicating substantial growth compared to previous periods.
In the interim budget for FY2024–25, the Ministry of Defence received a total allocation of $74.8 billion ( ₹6,21,540.85 crore).
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Of this, $2.9 billion ( ₹23,855 crore) was allocated to the Defence Research and Development Organisation (DRDO), while a substantial fund of $12.0 billion ( ₹1 lakh crore) was earmarked for Deep Tech. This fund aims to provide long-term loans to tech-savvy companies to foster innovation in defence technologies within India.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Published: 14 Jun 2024, 01:57 PM IST