Defence stocks in 2025: Rally slows after four years; check top gainers and losers list

After delivering stellar returns for four years, the Nifty India Defence index witnessed a slow momentum in 2025. While the pace of gains has slowed down compared to the previous years, the index has still risen about 19% so far this year. 

Despite the recent slowdown, the index’s long-term performance remains robust. Over the past six years, the Nifty India Defence index has posted strong annual gains of 9.5% in 2020, followed by a sharp rally of 56.7% in 2021 and 63.9% in 2022. The momentum further accelerated with an 88.2% surge in 2023 and a solid 54.8% rise in 2024.

India’s defence manufacturing has seen a remarkable transformation in the last eleven years. In 2023–24, the country recorded its highest ever defence production, touching ₹1.27 lakh crore. This is a sharp rise of 174% compared to ₹46,429 crore in 2014–15.

The Ministry of Defence had signed 193 contracts worth ₹2,09,050 crore in 2024–25—the highest ever in a single year. Of these, 177 contracts were awarded to the domestic industry, amounting to ₹1,68,922 crore.

Between January and June 2025, over 45 major defence orders were announced, pointing to three clear trends: modernisation, indigenisation, and global integration.

Nifty India Defence 2025

Gainers

Losers

Major defence events in 2025

Investors remained interested in the sector after three big events – Operation Sindoor, the India-US defence deal and the India-Russia deal.

In April 2025, following a brutal terror attack on civilians in Pahalgam, India launched Operation Sindoor, executing precise retaliatory strikes against nine terrorist camps in Pakistan and Pakistan-occupied Jammu and Kashmir. Following the operation, the defence stocks witnessed some significant gains.

During Russian President Vladimir Putin’s recent visit to India, Russia agreed to promote joint manufacturing of military hardware and spare parts in India to support the maintenance of Russian-origin arms and defence equipment.

Further, the United States had signed a 10-year defence framework agreement with India to deepen cooperation in technology, intelligence sharing, and strategic coordination.

India defence export and budget

India’s defence exports have surged 34 times in 11 years, from just ₹680 crore in FY14, recording a 12% year-on-year growth in FY25 to reach a record high of ₹23,620 crore. The country is now marching towards the ambitious target of increasing defence exports to ₹500 billion by FY29.

India’s annual defence production has crossed the ₹1.5 lakh crore mark for the first time in 2025, recording a sharp increase over previous years. Defence Minister Rajnath Singh described the achievement as a clear sign of the country’s strengthening defence industrial base. The 2024–25 figure represents an 18% increase over the previous fiscal year’s ₹1.2 lakh crore and a 90% surge from ₹79,071 crore in 2019–20.

The Union Budget 2025–26 has allocated a record over ₹6.81 lakh crore to the Ministry of Defence, marking a 9.53% increase over the current financial year. Of this, ₹1.80 lakh crore has been earmarked for the Armed Forces’ capital budget, with modernisation remaining a key focus and ₹1.12 lakh crore allocated for procurement from domestic industries.

What lies ahead?

In June 2025, a report by the Confederation of Indian Industry and KPMG India suggested that India's defence budget could rise a little under fivefold to ₹31.7 lakh crore in 2047 from ₹6.81 lakh crore in 2025-2026 (FY26), with defence production increasing over sixfold to ₹8.8 lakh crore from ₹1.46 lakh crore in FY25.

The report—titled Atmanirbhar, Agrani, and Atulya Bharat 2047—also estimated India's defence exports to rise to ₹2.8 lakh crore in 2047, up nearly twelvefold from ₹24,000 crore in FY25.

In the budget for FY26, the defence ministry had decided to observe 2025–26 as the “Year of Reforms” to further strengthen the government’s push for the modernisation of the Armed Forces. The initiative aims to simplify the Defence Procurement Procedure and ensure optimal utilisation of budgetary allocations.