HAL, BEML, BEL, Paras Defence: Defence stocks advance as DAC clears capital acquisition proposals worth ₹54,000 crore

The stocks gained as the Defence Acquisition Council (DAC), under the chairmanship of Defence Minister Shri Rajnath Singh, on March 20, 2025, accorded Acceptance of Necessity (AoNs) to eight capital acquisition proposals amounting to over ₹54,000 crore.

For the Indian Army, AoN for procurement of a 1350 HP engine was accorded to upgrade the present 1000 HP engine for the T-90 tanks.

This will enhance the battlefield mobility of these tanks, especially in high-altitude areas, by increasing the power-to-weight ratio.

For the Indian Navy, AoN for procurement of Varunastra torpedoes (combat) was accorded by DAC. The Varunastra Torpedo is an indigenously developed ship-launched anti-submarine torpedo developed by the Naval Science & Technological Laboratory. Induction of additional quantities of this torpedo would enhance the Navy's capability against adversaries' submarine threats.

For the Indian Air Force, AoN for procurement of Airborne Early Warning & Control (AEW&C) Aircraft Systems was accorded by DAC. AEW&C systems are capability enhancers which can change the complete spectrum of warfare and exponentially increase the combat potential of every other weapon system.

As a part of celebrating 2025 as the ‘Year of Reforms’ in the Ministry of Defence, DAC also approved the guidelines for reducing the timelines at various stages of the Capital Acquisition Process to make it faster, more effective and efficient, the press release by the Ministry of Defence said.

Other key details

The government had allocated ₹6.22 lakh crore to the Ministry of Defence in last year's full budget. Out of which, ₹1.72 lakh crore was set aside for the modernisation of defence forces and ₹92,088 crore for sustenance and operational readiness. Meanwhile, the government had revised its budget estimate to ₹1.59 lakh crore, according to the revised estimates for the Union Budget 2025.

For the financial year 2025-26, the government increased the defence budget to ₹6.81 lakh crore, an increase of 9.5% from the current financial year.

Meanwhile, Indian defence companies are also likely to benefit going ahead as the German Parliament has voted in favour of unprecedented defence expenditure.

According to a news report by the BBC, a two-thirds majority of Bundestag parliamentarians, required for the change, approved the vote on Tuesday.

The law will exempt spending on defence and security from Germany's strict debt rules and create a €500bn ($547bn; £420bn) infrastructure fund. This, the report added, is a seismic shift for the country that could reshape European defence.

The move suggests Indian defence companies are poised to benefit from increased orders for components and subsystems.