India Approves Rs 1 Lakh Crore Defence Projects, Boosting Domestic Players

Strategic Insights -

Nomura's report on India's defence sector highlights significant developments from the latest Defence Acquisition Council (DAC) meeting, with over Rs 1 lakh crore projects approved for domestic defence companies. The report analyzes the impact of these decisions, naming Bharat Electronics, Larsen & Toubro, and select defence shipyards as key beneficiaries. These approvals are expected to enhance mobility, air defence, and overall operational preparedness of the armed forces.

Key Takeaways:

  • The Defence Acquisition Council has approved "Acceptance of Necessity" (AoN) for 10 capital acquisition proposals worth nearly Rs 1.05 lakh crore, with a focus on indigenously designed, developed, and manufactured (IDDM) category.
  • The list of approved procurements includes surface to air missiles, electronic warfare systems, armoured recovery vehicles, moored mines, and submersible autonomous vessels, among others.
  • Bharat Electronics (BEL) is estimated to win the contract for the Quick Reaction Surface-to-Air Missile (QRSAM) system worth Rs 30,000 crore by the end of 2025, enhancing the company's command and control systems, radars, and tracking modules.
  • Larsen & Toubro (L&T) is set to supply the missile launch systems for the QRSAM project, indicating a significant contract flow for the company.
  • The Mine Countermeasure Vessel (MCMV) program has been revived, with a formal Request for Proposal (RFP) to be issued to Indian shipyards, including Goa Shipyard, expected to be rolled out 7-8 years after contract finalisation.
  • Nomura has identified Bharat Electronics, Larsen & Toubro, and Goa Shipyard as top picks for investment, highlighting their potential involvement in these projects.
  • Bharat Dynamics, BDL, is the primary missile manufacturer for the QRSAM program, indicating significant subcontracting orders in the pipeline.

Statistics:

  • Total approved procurements worth nearly Rs 1.05 lakh crore in the IDDM category.
  • The QRSAM system contract estimated at Rs 30,000 crore, to be awarded to Bharat Electronics by the end of 2025.
  • The MCMV program expected to be rolled out 7-8 years after contract finalisation.
  • 90% indigenisation of the QRSAM project, with potential to reach 99% with further development.

Sources:

  • "Nomura on India's Defence Sector" by Oliviya Kunjumon Nomura on Contify.com (2025)
  • Defence Acquisition Council (DAC) meeting on July 3
  • Nomura report on India's defence sector
  • Contify.com