Defence stocks surge as India eyes bigger share of global arms market
Choice of defence stocks
India’s major defence stocks, viz. Cochin Shipyard, Paras Defence, Mazagon Dock Shipbuilders, Bharat Dynamics, Bharat Electronics and Hindustan Aeronautics are likely to do well. But the rise in these stocks will be a function of various factors. Hence, it’s difficult to quantify the rise in these scrips.
Where do we go from here?
Considered in a proper historical and comparative perspective, India’s defence exports zoomed 34-fold from just Rs. 686 crore in 2013–14 to Rs. 23,622 crore in 2024–25. Shri Rajnath Singh, India’s Defence Minister stressed that this extraordinary rise demonstrates the growing strength of India’s defence sector, fuelled by the vision of “Atmanirbhar Bharat” (self-reliant India) and strategic policy interventions, such as the Make in India initiative and Production-Linked Incentive (PLI) schemes. These contextually significant initiatives have attempted to enhance the global competitiveness of Indian manufacturers, boost exports, attract foreign investments, and reduce dependency on imports. Consequently, surging defence production led to hefty returns for investors in public sector undertakings (PSUs) engaged in defence manufacturing.
With the establishment of multiple defence hubs and increased collaboration with global players, India’s defence and aerospace ecosystem is also expanding rapidly. The Ministry of Defence (MoD) revealed that India exported a wide array of defence items, including ammunition, weapons, systems/subsystems, and components—to nearly 80 countries in FY 25. In a concerted attempt to consolidate India’s footprint in the global defence market and raise the bar, the government has now set an ambitious target of achieving annual defence exports of Rs.50,000 crore by 2029. The Nifty India Defence Index has surged by over 30% in the past three months, reflecting rising investor confidence strengthened by the effective performance of indigenously developed defence systems. The strategic and commercial value of self-reliance in defence manufacturing is self-evident and, therefore, India is certain to go full steam ahead in this crucial area.
Transforming ground realities, changing equations
Global defence purchase of arms and ammunition is a huge and growing market. With India’s weaponry acquiring a “critical mass”, we see greater collaboration in defence production between Russia, France, Israel and India as partners in development because of a confluence and convergence of these countries’ strategic, economic and defence interests. It has been held, and justifiably so, that India is all set to garner a larger share of the global arms market in conformity with its rising economic ascendancy, technological development and knowledge of the ecosystem of weapons.
(The author is Chief Economist, Infomerics Ratings. The views are personal)
