India’s listed defence companies saw their combined order inflows decline by around 17% in FY26 as delays in finalising some of the sector’s biggest procurement programmes weighed on new business. But a massive pipeline of government approvals could set the stage for a sharp recovery in defence ordering, according to a report by Antique Stock Broking.
The Ministry of Defence accorded Acceptance of Necessity (AoN) approvals worth Rs 6.7 lakh crore in FY26, creating a substantial pipeline of potential defence contracts. Antique Stock Broking said the ordering momentum is expected to regain traction in the near term, particularly as negotiations for several major programmes have largely been completed.
The report, titled “India Defence Sector – Ordering to Gain Momentum”, said delays in three major programmes – the P-75I submarine project, Quick Reaction Surface-to-Air Missile (QRSAM) system and Next Generation Corvette (NGC) programme – contributed to the decline in order inflows for listed defence public sector undertakings (DPSUs).
However, with these programmes moving closer to final approval, the brokerage expects the FY26-27 ordering pipeline to remain robust.
Why defence orders fell in FY26
The combined order intake of listed defence companies stood at Rs 1.18 lakh crore in FY26, down from Rs 1.68 lakh crore in FY25, according to the report. The decline came despite a sharp increase in government defence spending and a large volume of AoN approvals.
Antique Stock Broking attributed the weaker order inflows primarily to delays in finalising large-ticket programmes. The P-75I submarines, QRSAM systems and Next Generation Corvette programme are among the key projects whose delayed award affected the order intake of listed defence companies.
However, the brokerage said contractual negotiations for these programmes have been largely completed, paving the way for final clearance from the Cabinet Committee on Security (CCS). That could provide a significant boost to order books in the near term.
Three big programmes could drive the reversal
The P-75I submarine programme is estimated at around Rs 90,000 crore, with Mazagon Dock Shipbuilders (MDL) expected to receive the order.
The QRSAM programme, estimated at around Rs 30,000 crore, is expected to benefit Bharat Electronics (BEL).
The third major programme is the Next Generation Corvette, estimated at around Rs 33,000 crore, with Garden Reach Shipbuilders & Engineers (GRSE) expected to be the beneficiary.
Together, these three programmes represent an estimated Rs 1.53 lakh crore in potential orders.
The impact could also extend beyond the primary contractors. Antique Stock Broking expects Bharat Dynamics Limited (BDL) to benefit from missile supplies worth around Rs 10,000-12,000 crore for the QRSAM programme. BEL, meanwhile, is expected to secure orders for Combat Management Systems (CMS) for both the NGC and P-75I programmes.
Order intake could jump sharply
The brokerage’s projections indicate the potential scale of the recovery. Combined order intake of listed defence companies is estimated to rise to Rs 3.30 lakh crore in FY27, from Rs 1.18 lakh crore in FY26. It is projected to remain elevated at around Rs 3.11 lakh crore in FY28.
That would represent a substantial increase from the order-intake levels recorded during most of the previous decade.
Order intake had stood at Rs 70,800 crore in FY19 and Rs 54,000 crore in FY20 before rising to Rs 1.24 lakh crore in FY21. It subsequently moved between Rs 77,800 crore and Rs 83,600 crore during FY22-FY24 before jumping to Rs 1.68 lakh crore in FY25. The FY26 decline, therefore, came after a particularly strong FY25.
Revenue growth expected to follow
The impact of the order pipeline is also expected to show up in the revenues of listed defence PSUs. Combined revenue stood at Rs 88,000 crore in FY26, up around 10% year-on-year, according to the report.
Antique Stock Broking expects this to rise to Rs 1.06 lakh crore in FY27, representing approximately 21% growth, followed by Rs 1.22 lakh crore in FY28, an estimated 15% increase.
The trajectory shows the potential lag between government approvals, contract awards, execution and eventual revenue recognition.
Defence spending continues to rise
The prospective increase in ordering comes against the backdrop of rising government defence expenditure. According to the report, defence capital expenditure has increased steadily over the past decade. Budgeted capital expenditure rose from Rs 86,400 crore in FY17 to Rs 1.87 lakh crore in FY26 (RE).
For FY27, the budget estimate stands at Rs 2.19 lakh crore.
The report describes the trend as a steady 9.7% compound annual growth rate in budgeted capital expenditure. The increase in capital spending provides a larger pool for major procurement programmes involving aircraft, ships, missiles, air-defence systems and other military equipment.
Defence exports reach record high
India’s defence export performance has also strengthened significantly during the period. According to Antique Stock Broking, defence exports increased from Rs 2,050 crore in FY16 to Rs 38,400 crore in FY26. Exports had risen to Rs 10,700 crore in FY19 and Rs 15,900 crore in FY23 before reaching Rs 21,080 crore in FY24 and Rs 23,600 crore in FY25.
The FY26 figure marks the highest level in the period covered by the report.
Geopolitical tensions create longer demand cycle
Beyond India’s domestic procurement plans, the report points to a broader international demand cycle. Antique Stock Broking said heightened geopolitical tensions and replenishment requirements across Europe, Asia and the Middle East have created a multi-year demand cycle for missiles, aircraft, anti-drone systems, ammunition, rockets and high-energy materials.
The industry, according to the report, is indicating sustained demand visibility for the next five to seven years.
This external demand comes alongside India’s continuing push to increase domestic production and reduce dependence on imports.
Private sector set to play a bigger role
The report also revealed the rise in private defence manufacturers role in India’s procurement ecosystem. According to Antique Stock Broking, India’s continued focus on self-reliance is accelerating procurement from domestic private-sector companies. Long-term programmes involving rockets, ammunition and advanced weapon systems are creating opportunities for recurring supplies rather than one-off orders.
What the Rs 6.7 lakh crore pipeline means
The key takeaway from the report is that the 17% fall in FY26 order inflows does not necessarily indicate a weakening defence cycle. Instead, Antique Stock Broking sees the decline as being linked to delays in a handful of large programmes that have already progressed significantly through the procurement process.
With Rs 6.7 lakh crore worth of AoN approvals accorded in FY26 and major programmes such as P-75I, QRSAM and NGC moving towards final clearance, the brokerage expects ordering momentum to improve.
The article presents market projections and order intake forecasts based on a third-party research report by Antique Stock Broking, referencing specific listed defence stocks. While it provides analysis on sector trends and procurement pipelines, the findings are derived from brokerage estimates and should not be construed as direct investment advice or stock recommendations. Readers are encouraged to evaluate their personal financial goals and consult a SEBI-registered investment advisor before making investment decisions based on market forecasts.