Defence Stocks Surge Up to 9% as DAC Approves ₹1.05 Lakh Crore Procurement Plan

Shares of defence companies rallied sharply on Thursday after the Defence Acquisition Council (DAC) approved capital acquisition proposals worth ₹1.05 lakh crore, focused predominantly on indigenously developed military equipment.

Stocks such as Paras Defence, Bharat Dynamics, BEML, Cochin Shipyard, and HAL gained between 3–9% during intraday trade, as the announcement bolstered investor sentiment around long-term order visibility and localisation of defence manufacturing.

What’s Been Approved?

Chaired by Defence Minister Rajnath Singh, the DAC cleared proposals across services under the ‘Buy Indian – IDDM’ (Indigenously Designed, Developed and Manufactured) category. The approvals span critical platforms and technologies aimed at enhancing combat readiness across land, sea, and air.

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• According to defence sources, key items cleared include:
• Upgraded Arjun Mk1-A tanks for the Army
• Next-generation Offshore Patrol Vessels for the Navy
• State-of-the-art radars, communication systems, and air defence platforms
• High-endurance UAVs and surveillance tech

The objective, according to the Ministry of Defence, is to promote self-reliance under the ‘Aatmanirbhar Bharat’ initiative and reduce reliance on foreign military imports.

Market Reaction
The Street responded swiftly, with defence stocks seeing broad-based buying. Here's how key players moved:

*As on 10:30 am

Brokerages noted that the approvals were “significantly above market expectations” and reinforced the government’s commitment to indigenous capability building. "This could result in a strong multi-year revenue pipeline for Indian defence manufacturers," said a Mumbai-based defence analyst.

Strategic Implications

While India has steadily increased defence capex in recent years, Thursday’s DAC clearance stands out for its scale and strategic depth. Analysts view the move as a deliberate pivot toward reducing dependency on imports and strengthening the domestic industrial base.

“This isn’t just about procurement. It’s about nurturing technology, production capacity, and sovereign capability in critical defence segments,” said a senior official at a state-run defence PSU.

What Lies Ahead

Although sentiment remains bullish, analysts caution that order execution, production timelines, and clarity on contract structures will be key over the next few quarters. Past experiences suggest that not all DAC approvals immediately convert into revenue, given the lengthy procurement process.

That said, the market appears to be pricing in stronger fundamentals for key players with proven execution records.