Higher allocations, sharp rise in capital spending and focus on domestic procurement to drive long-term growth, says Antique Stock Broking
India’s defence industry is expected to clock double-digit growth in the coming years, aided by a strong policy thrust and a sharp increase in capital allocation in the Union Budget 2026–27, according to a report by Antique Stock Broking.
The report noted that the defence budget for FY27 has been pegged at ₹7.84 trillion, accounting for nearly 15 per cent of the total Union Budget, marking a 15 per cent year-on-year increase over FY26 Budget Estimates.
A key highlight of Budget 2026 is the significant rise in capital expenditure. Capital spending on defence has been increased by 21.8 per cent to ₹2.19 trillion, reflecting the government’s intent to accelerate modernisation of the armed forces amid rising geopolitical tensions.
According to the report, the current global security environment underscores the need for sustained investment in defence modernisation. In line with this, the Ministry of Defence has earmarked 75 per cent of the capital acquisition budget for procurement from domestic industries in FY27, reinforcing the government’s push for indigenisation and self-reliance in defence manufacturing.
“Our interactions with industry indicate that the budgetary support, combined with faster decision-making, should translate into a pickup in order inflows,” the report said.
Antique Stock Broking expects major defence orders to be placed during FY27–28, which is likely to provide sustained revenue visibility for defence companies and support long-term sectoral growth.
The report further highlighted that higher capital expenditure, a strong emphasis on domestic procurement and an improving execution environment together set the stage for robust expansion of India’s defence industry in the coming years.
It added that with governments worldwide stepping up defence preparedness amid escalating geopolitical risks, Indian defence manufacturers stand to benefit as New Delhi continues to prioritise procurement from local players and works to reduce procedural timelines for awarding contracts, thereby speeding up execution.
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