Defence stocks surge as Modi bets big on sector

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

Moneycontrol Bureau

Defence stocks were buzzing on buyers’ radar on Wednesday as Modi-led government lay emphasis on the sector. Stocks like Pipavav Defence (up 13 percent), BEL (up 9 percent), BEML (4 percent) and Astra Microwave (up 17 percent) saw active buying interest in trade today.

Meanwhile, Prime Minister Narendra Modi said the government did not want India to be the biggest importer of defence equipment in the world, and vowed to double output of defence manufacturing in the country. He was speaking at the inauguration of Aero India 2015 in Bengaluru.

India’s annual defence import bill is roughly USD 20 billion; something that Defence Minister Manohar Parrikar recently described as “unaffordable” and having “undesirable consequences” for the economy. In contrast, India’s domestic defence production output is around USD 7 billion.

Modi said even a 20-25 percent decrease in defence import can create 2 lakh jobs in the country. Also, a 25 percent hike in domestic defence output can create 1 lakh skilled jobs, he said.

Modi said the government was keen to expand the role of private sector for Indian defence production and that preference would be given to defence products made locally.He said the government would ensure that tax rules that placed domestic manufacturers of arms on an equal footing with imports.

This year’s Budget has allocated around Rs 2.3 lakh crore towards defence spend on the third largest armed force in the world. According to statistics on the Make in India website, 40 percent of the Budget is spent on capital acquisitions, and 60 percent of requirements is met through imports.

Last month, Defence Minister Manohar Parrikar proposed major changes in the Procurement Procedure and Production Policy to provide greater autonomy to state-run suppliers and Ordnance Factory Board (OFB) units for their expansion and diversification. Many Indian companies are expanding their presence in the defence sector sensing an opportunity because of the government’s thrust on domestic production.