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The government raised allocations for the defence sector in the interim budget for 2024-25 (April-March), in its aim to strengthen national security forces and boost local procurement.
Of the total capital outlay of Rs 11.11 lakh crore, defence sector has been allocated Rs 6.2 lakh crore, an increase of 4.4% from FY24 budgeted allocation.
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However, the increase in the defence outlay was much lesser than that in FY24. In the budget for FY24, the government had increased the defence budget by 13.8% to Rs 5.94 lakh crore. Of this, it has already spent over Rs 4 lakh crore so far in the current fiscal year.
Finance Minister Nirmala Sitharaman in her Interim Budget speech also announced that a new scheme will be launched for strengthening deep-tech technologies for defence purposes and expediting ‘Atmanirbharta’.Also Read | Railway stocks trade off highs; was FY25 Interim Budget a disappointment? Shares of Bharat Electronics, Hindustan Aeronautics, Kaynes Technology, Bharat Heavy Electricals, Mazagon Dock Shipbuilders, Bharat Dynamics, Mishra Dhatu Nigam, and MTAR Technologies fell 0.5-3.5%.
Some of the outliers were Astra Microwave Products and BEML that rose nearly 4% each.
The higher allocation towards the sector in recent years has driven order inflows and boosted the order books of defence equipment makers.
In November 2023, the Defence Acquisition Council had approved capital acquisition proposals worth Rs 2.23 lakh crore to enhance the operational capabilities of the Indian Army, of which Rs 2.20 lakh crore worth of acquisitions will be sourced from domestic industries, giving a major boost to “Make in India” in the defence sector.
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Bharat Electronics has announced order wins worth around Rs 29,500 crore so far in the current financial year.
HAL has a $10 billion-plus order book, and UBS Securities, which recently initiated coverage on the stock, had said that the company is poised to benefit from the expected $60 billion worth of defence aircraft orders over FY24-28, of which, $16 billion worth orders have already been approved.
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