Finance Minister Arun Jaitley, in his Budget Speech, said that two defence industrial corridors will be set up. The government also announced that it will come out with an industry-friendly defence production policy
Defence stocks were buzzing in trade on Thursday as the government announced measures fo the defence sector in the Budget.
Finance Minister Arun Jaitley, in his Budget Speech, said that two defence industrial corridors will be set up. The government also announced that it will come out with an industry-friendly defence production policy.
"Much of the proposals in the past for developing a thriving domestic defense manufacturing industry did not go beyond the idea stage. A renewed focus is much needed to create a new ecosystem to decrease nearly total dependency on imports in this critical sector," Milind Kothari, Managing Partner, BDO India, said in a statement.
Brokerage houses had expected a hike in the sector allocation. Edelweiss pegged the capital allocation to rise by 8 percent. Companies which manufacture defense-related equipment should benefit positively such as L&T, M&M, BEML, Bharat Electronics, Bharat Forge etc. among others.
“We expect higher allocation for domestic companies as import content may reduce gradually,” brokerage house Edelweiss had said in its report.
A report by Moneycontrol Research had stated the capital acquisition of defence hardware in the next 15 years is expected to be Rs 1.5 lakh crore (USD 225 billion), divided under- i) Land systems (Rs 6 lakh crore) - focused on small arms, ammunition, artillery and air defence guns, combat vehicles and anti-tank missiles., ii) Aerospace – Rs 5.2 lakh crore, iii) Naval – Rs 3.5 lakh crore, and iv) Security (Rs 0.3 lakh crore) – catering to all segments with Radars, electro-optics, C4I system, underwater systems, missiles and guided weapons, avionics, and communications and electronic warfare.
Based on a few other metrics, it had prepared a portfolio of defence stocks as well for long-term ‘buy & hold’ investors to capitalise on the opportunity that “Make in India in Defence” is likely to offer.