(Sept 8): Shares of Indian defence companies rose after the government gave an initial approval for about US$11 billion (RM44.49 billion) of proposed military purchases.

The BSE India Defence Index advanced as much as 2.1% Tuesday — the most in more than a month — with Hindustan Aeronautics Ltd and Bharat Electronics Ltd leading the gains. Bullish calls from Jefferies on some defence companies added to the optimism.

About 98% of the approved procurements, which include helicopters and recce vehicles, will be sourced from the local industry, the Ministry of Defence said in a statement released after market hours Monday.

The reaction in the stock market highlights growing investor expectations that India’s push to modernise its armed forces and source more equipment locally will translate into a sustained order pipeline for defence firms.

Astra Microwave Products Ltd and Solar Industries India Ltd gained 2.4% and 4.2% respectively as Jefferies initiated coverage with buy ratings, citing rising domestic defence spending and growing exports. 

India’s defence capital expenditure is expected to increase at a 16% compound annual rate over the next four years, analysts including Lavina Quadros wrote in a note.

While state-owned firms still dominate the industry, private companies are gaining market share, with their revenue contribution among key listed defence firms rising to 16% in fiscal 2026, from 9% three years earlier, according to Jefferies.

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