Defence stocks: Fifth PIL boosts Make in India in 2026

Introduction: a fresh policy push for defence indigenisation

Indian defence stocks were back in focus after multiple policy and procurement updates reinforced the government’s push to reduce import dependence. A key trigger was the Ministry of Defence notifying the fifth Positive Indigenisation List (PIL) of 346 items, alongside a series of procurement-related announcements and brokerage updates.

The developments matter because the fifth PIL restricts future procurement of listed items to domestic sources after indigenisation timelines, and it links directly to how Defence Public Sector Undertakings (DPSUs) and private suppliers plan capacity, R&D, and vendor development. The announcements also fed into near-term market moves across large listed defence companies.

MOFSL Q3 preview: Buy ratings maintained on key names

In its latest Q3 preview note on capital goods and defence, MOFSL reaffirmed its ‘Buy’ ratings on Bharat Electronics Ltd (BEL), Bharat Dynamics Ltd (BDL), Hindustan Aeronautics Ltd (HAL), and Astra Microwave. The brokerage maintained a ‘Neutral’ stance on Zen Technologies.

The note arrived against a backdrop of policy-driven order visibility, with domestic procurement lists and approvals shaping investor expectations for defence manufacturing and electronics companies.

Fifth Positive Indigenisation List: what the MoD notified

The Department of Defence Production (DDP), Ministry of Defence, notified the fifth Positive Indigenisation List consisting of 346 items. The list includes strategically important Line Replacement Units, systems, sub-systems, assemblies, sub-assemblies, spares and components, and raw materials.

The stated intent is to boost Aatmanirbharta in defence and minimise imports by DPSUs. The items in the fifth PIL have an import substitution value of ₹1,048 crore.

What changes with procurement under the fifth PIL

As per the ministry’s notification, the items will be procured only from Indian industry after the timelines of indigenisation indicated in the list available on the Srijan portal (https://srijandefence.gov.in). The ministry has also said the items will be procured from indigenous sources as per provisions under the Defence Acquisition Procedure (DAP) 2020.

Operationally, this shifts the sourcing roadmap for listed items away from imports and towards domestic manufacturing and development, including through MSME participation. The DDP said the approach is expected to support economic activity, enhance investment in defence, and reduce import dependence.

DPSUs named in the fifth PIL and how industry can participate

The DPSUs involved in defence items of the fifth PIL include Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), Bharat Dynamics Limited (BDL), BEML Limited, India Optel Limited (IOL), Mazagon Dock Shipbuilders Limited (MDL), Goa Shipyard Limited (GSL), Garden Reach Shipbuilders & Engineers Ltd (GRSE), and Hindustan Shipyard Limited (HSL).

The ministry said these DPSUs have initiated the process for issuing Expressions of Interest and Requests for Proposal on their respective websites, with a link available on the Srijan Portal Dashboard (srijandefence.gov.in/DashboardForPublic). Industry participants, including MSMEs and start-ups, were encouraged to take part.

DAC clears procurement proposals worth ₹67,000 crore

Separately, India’s Defence Acquisition Council (DAC), chaired by Defence Minister Rajnath Singh, cleared procurement proposals worth approximately ₹67,000 crore.

The update reinforced the “Make in India” push and pointed to opportunities for domestic suppliers, with the announcement referencing companies such as HAL, BEL, BDL, Solar Industries, MIDHANI, and Ideaforge Technology as part of the broader domestic supplier ecosystem.

MoD intent for FY26 contracts: ₹200,000 crore in capital deals

Shares of HAL, BEL, and BDL were also in focus after the Ministry of Defence announced its intent to sign defence contracts worth ₹200,000 crore in FY26. Defence Secretary Giridhar Aramane said the ministry plans to maintain the momentum of indigenisation with these contracts, ensuring the majority of orders benefit Indian defence players.

The proposed scale of capital contracting adds to the policy narrative behind Aatmanirbhar Bharat in defence production, with the government reiterating a preference for domestic capability creation.

Stock moves: immediate reaction and a two-day rally in select names

Following the DAC announcement, the market response across major defence firms was mixed on the day:

• BEL was up about 0.54%
• BDL was down about 0.57%
• HAL was up about 1.02%
• Ideaforge Technology was down 1.32%

Over a two-trading-day period (Wednesday and Thursday), several defence-linked stocks gained as much as 5%. In that window, Bharat Dynamics climbed 3.32%, Cochin Shipyard gained 2.82%, Mishra Dhatu Nigam Ltd advanced 2.18%, and Bharat Electronics rose 1.93%. The list of gainers mentioned also included Mazagon Dock, Bharat Forge, Astra Microwave Products, and Paras Defence and Space Technologies.

What brokerages and analysts said

Antique Stock Broking maintained a bullish stance on defence companies including HAL, BDL, BEL, and Bharat Earth Movers after the fifth PIL notification. The brokerage maintained a ‘buy’ call with target prices of ₹6,145 for HAL, ₹1,643 for BDL, ₹339 for BEL, and ₹5,216 for Bharat Earth Movers.

The ministry’s notification also stated that more than 12,300 items were indigenised in the last three years and that DPSUs placed orders worth ₹7,572 crore on domestic vendors. Antique highlighted the role of PILs in reducing the import bill and supporting development of the domestic defence sector.

Separately, ICICI Securities said BEL is its top pick in the space, followed by HAL and BDL. In a note on potential order inflows, ICICI Securities said BEL leads with 24 probable order accruals, followed by 11 for L&T and 10 for Solar Industries.

Why these policy signals matter for order visibility

Analysts linked the indigenisation lists and procurement actions to clearer revenue visibility for defence-related companies. Deepak Jasani, Head of Retail Research at HDFC Securities, said the lists improved revenue visibility for most defence-related companies and that the government has given orders to boost indigenisation.

Gaurang Shah, Senior Vice President at Geojit Financial Services, said defence sector stocks have outperformed over the last year and that companies such as BEL, HAL, BDL, Mazagon Dock, and Cochin Shipyard are likely to get more orders from the defence ministry, which could support earnings.

Key numbers and facts at a glance

Conclusion: a busy policy calendar keeps defence names in focus

The fifth PIL notification, the DAC clearance of proposals worth about ₹67,000 crore, and the MoD’s stated intent to sign ₹200,000 crore of contracts in FY26 together strengthened the policy backdrop for domestic defence manufacturing. Brokerages have responded by reiterating positive calls on several frontline defence names, while day-to-day market moves have remained mixed.

The next set of developments to track will be DPSU Expressions of Interest and Requests for Proposal linked to the fifth PIL via the Srijan Portal Dashboard, and any further timelines or contracting milestones tied to FY26 procurement.