Defence Stocks Rally up to 6% as DAC Approves ₹54,000 Crore Acquisition Plans

On March 21, shares of prominent domestic defence manufacturers surged after the Defence Acquisition Council (DAC) sanctioned eight capital procurement projects worth over ₹54,000 crore. This bullish sentiment propelled the Nifty India Defence index upward by over 1%, reaching around 6,245 during early trading hours. This marked the index's seventh consecutive session of gains, underlining the sustained investor interest in India's defence manufacturing space.

The approvals come at a time when the government is aggressively pushing for self-reliance in defence production. With geopolitical uncertainties and increasing border tensions in recent years, India has ramped up its focus on enhancing its military capabilities and reducing dependency on imports.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

Key Gainers Among Defence Stocks

Several defence-related stocks witnessed a strong rally:

• Apollo Micro Systems’ share price, involved in developing early warning systems like AEW&C, rose nearly 4%.
• Bharat Dynamics Ltd. (BDL) share price, which is seen as a potential beneficiary of the newly approved torpedo acquisitions, gained over 3%.
• DCX Systems’ share price was the top gainer, spiking more than 6% to ₹254.
• ideaForge’s share price, a drone technology company, jumped over 4% to ₹399, while Zen Technologies’ share price, which specializes in defence simulation and training systems, rose over 3% to ₹1,333.
• Heavyweights like Hindustan Aeronautics Ltd. (HAL) and Paras Defence also advanced around 2%.
• Bharat Electronics Ltd. (BEL) edged higher, trading at ₹298.
   

These gains reflect a market-wide positive sentiment around defence sector investments, especially for firms aligned with indigenous production capabilities.

Details of DAC Approvals

The Ministry of Defence announced on March 20 that the DAC had granted Acceptance of Necessity (AoN) to eight acquisition proposals. Key highlights include:

• 1,350 HP engines to upgrade Indian Army’s T-90 tanks. These new engines are expected to significantly enhance operational mobility in high-altitude areas, increasing the tanks’ power-to-weight ratio.
• Varunastra Torpedoes (Combat) for the Navy. Developed by the Naval Science & Technological Laboratory, these torpedoes are ship-launched and designed to target enemy submarines, boosting underwater warfare capabilities.
• Airborne Early Warning & Control (AEW&C) Aircraft Systems for the Air Force. These high-tech systems enhance situational awareness, allowing for better command and control over the battlefield. According to the ministry, AEW&C systems can “exponentially increase the combat potential” of other weapon systems.
   

These acquisitions align with India’s long-term strategy to upgrade and modernize its armed forces using locally developed technology.

Reform Measures and Strategic Focus

As part of broader reforms, the DAC also approved new norms aimed at making the capital acquisition process faster, more effective, and transparent. These include changes to procurement timelines and simplification of approval processes. These reforms are in line with the government’s declaration of 2025 as the “Year of Reforms” in the Ministry of Defence.

Such administrative improvements are expected to boost private sector participation, streamline defence contracts, and foster faster deployment of critical systems.

Boost to ‘Aatmanirbhar Bharat’ and Industry Outlook

This latest round of approvals represents a strategic move under the “Aatmanirbhar Bharat” initiative, which aims to build a self-reliant India by promoting domestic manufacturing across critical sectors, including defence.

Over the last few years, the government has consistently introduced policy measures to support indigenous defence industries, such as:

• Imposing import bans on certain categories of defence equipment,
• Increasing FDI limits in defence manufacturing,
• Offering financial incentives and R&D grants to private players.
   

The result is a growing ecosystem of startups and established players who are now actively engaged in delivering high-end systems to the Indian armed forces.

Long-Term Sectoral Impact

Experts believe that sustained investments and regulatory support will propel India towards becoming a global defence manufacturing hub. The growth of companies like ideaForge, Zen Technologies, and Astra Microwave is a testament to the country’s innovation potential in defence tech.

As the government continues to prioritize military modernization and efficiency, investors are likely to view the defence sector as a resilient and high-growth area in the broader Indian equity market.