India’s Defence Ministry is preparing for a major push in defence spending, with Defence Secretary Rajesh Kumar Singh advocating an 18% increase in capital expenditure (capex) for FY26. Alongside this, the ministry is expected to announce additional procurement orders worth nearly ₹75,000 crore, reinforcing India’s drive toward defence self-reliance.
₹75,000 Crore Defence Orders in FY26
Speaking at the Network18 Reforms Reloaded event, Singh outlined plans to expand annual defence capex to $25–30 billion, with a focus on modernising the armed forces and accelerating indigenisation.
Key upcoming procurements include:
- A ₹30,000 crore order for Medium-Altitude Long-Endurance (MALE) drones
- Additional advanced drone systems and AWACS platforms, together accounting for about ₹75,000 crore in FY26
Defence Budget to Reach 2.5–3% of GDP
The ministry is also recommending that India’s overall defence outlay rise to 2.5–3% of GDP, ensuring preparedness for prolonged conflicts while reducing reliance on imports. Future procurement plans also cover 4.5-generation fighter jets to strengthen India’s aerial defence capabilities.
Focus on Domestic Manufacturing and Private Sector
Under the government’s self-reliance (Atmanirbhar Bharat) initiative, 75% of defence capex is now reserved for domestic procurement. Singh emphasised creating a robust indigenous ecosystem by:
- Empowering private defence manufacturers
- Supporting defence-focused startups
- Removing legacy barriers like product reservations
While some niche, high-end systems may still require global purchases, most requirements are expected to be met domestically, either through indigenous development or technology transfer arrangements.
Defence Stocks in Focus
The capital expenditure push is expected to benefit listed defence companies, particularly:
- Hindustan Aeronautics Ltd (HAL)
- Bharat Dynamics Ltd (BDL)
- Bharat Electronics Ltd (BEL)
Large orders in fighter aircraft, missile systems, and defence electronics are expected to keep these stocks in the spotlight through FY26.
Long-Term Defence Investment Vision
Looking ahead, the Defence Ministry has outlined a vision of sustained annual investments of $35 billion or more over the next 15 years. The strategy aims to build domestic self-reliance, bolster strategic preparedness, and leverage R&D efforts from DRDO and partner agencies for technology advancement.
Summary:
India’s Defence Ministry is pushing for an 18% rise in defence capex in FY26, with ₹75,000 crore in additional procurement orders expected for drones, AWACS systems, and advanced platforms. With 75% of capex earmarked for domestic procurement, the move aims to strengthen self-reliance and support private sector participation. Defence stocks like HAL, BDL, and BEL are likely to benefit, while long-term plans include $35 billion+ annual investments over 15 years to modernise India’s armed forces and reduce import dependency.
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