Bharat Forge & Budget 2026: Infra Push A Silver Lining As Key Defence Demands Go Unmet

Introduction: High Hopes from the Defence Sector

As Finance Minister Nirmala Sitharaman presented the Union Budget 2026, the Indian defence manufacturing sector, particularly private players like Bharat Forge, watched with keen interest. Ahead of the budget, Bharat Forge's Chairman, Baba Kalyani, had clearly articulated two critical reforms needed to unlock the sector's global potential: flexible export credit and dedicated R&D support for private firms. While the budget laid out a broad vision for a 'Vikasit Bharat' with a strong focus on manufacturing and infrastructure, it left these specific defence-related expectations largely unaddressed, creating a mixed bag of outcomes for the forging giant.

Key Defence Demands Go Unanswered

The central point of anticipation for Bharat Forge was policy support to bolster its rapidly growing defence vertical. The company, with a defence order book now exceeding ₹11,000 crore, is increasingly looking at international markets. Mr. Kalyani had highlighted that the lack of competitive export financing, compared to what rival nations offer, was a significant hurdle in securing contracts in Africa and Southeast Asia. He had proposed that export credit be administered through the Ministry of Defence for better alignment with the sector's needs.

Similarly, the call for a dedicated R&D budget for private companies aimed to accelerate innovation and reduce reliance on the state-run DRDO. However, the Union Budget 2026 speech did not contain specific announcements on either of these fronts. This omission means that companies like Bharat Forge will have to continue navigating the existing export financing framework and rely on their internal accruals for R&D, potentially slowing their pace of global expansion and innovation compared to state-supported international competitors.

The Silver Lining: A Massive Infrastructure and Capex Push

While the budget was silent on direct defence export incentives, its strong emphasis on domestic capital expenditure provides a significant tailwind for Bharat Forge's other business segments. The government announced an increase in the public capital expenditure outlay to ₹12.2 lakh crore, a substantial step up aimed at modernizing India's infrastructure.

This massive spending will directly fuel demand in sectors where Bharat Forge is a critical supplier:

• Commercial Vehicles: Increased construction activity, new freight corridors, and port development will drive demand for medium and heavy commercial vehicles, a core market for Bharat Forge's automotive forgings.
• Construction & Mining Equipment (CME): The budget's proposal for a scheme to enhance domestic manufacturing of high-value construction equipment aligns perfectly with the company's industrial components business.
• Railways: The development of new freight corridors and the overall modernization of the railway network will create sustained demand for forged components used in locomotives and wagons.

This domestic focus helps Bharat Forge de-risk its portfolio at a time when its traditional automotive export markets in North America and Europe are facing cyclical headwinds.

Budget 2026: Key Announcements and Impact on Bharat Forge

Strategic Alignment with 'Make in India'

The budget's underlying theme of 'Atmanirbharata' (self-reliance) and scaling up domestic manufacturing resonates with Bharat Forge's strategic direction. The company has successfully transformed from a primarily automotive component maker to a diversified industrial powerhouse with a strong foothold in defence. The budget's support for creating champion MSMEs and rejuvenating industrial clusters will also strengthen Bharat Forge's domestic supply chain.

The customs duty exemption for components used in civilian aircraft manufacturing is another subtle but important positive. As Bharat Forge continues to scale its aerospace business, which has already grown 4x in five years, such measures will improve cost competitiveness and support its long-term growth ambitions in the high-value sector.

Conclusion: A Story of Domestic Strength

For Bharat Forge, the Union Budget 2026 is a tale of two halves. The lack of direct support for defence exports is a clear disappointment and a missed opportunity to accelerate the 'Make in India for the world' narrative in the defence space. However, the government's unwavering focus on building domestic infrastructure provides a powerful and timely cushion. The budget effectively reinforces the domestic growth story, creating robust demand for the company's automotive and industrial products. The onus is now on Bharat Forge to leverage these domestic tailwinds to strengthen its financials, while continuing to advocate for the policy changes needed to conquer the global defence market.