Shares of key defence companies rallied after the Defence Acquisition Council (DAC) approved major procurement proposals worth Rs 1,44,716 crore for the Indian Armed Forces.
Shares of Mazagon Dock and Garden Reach Shipbuilders (GRSE) jumped up by over 6% and 4%, respectively, while Hindustan Aeronautics (HAL) and Bharat Dynamics shares were up by 1%. Mishra Dhatu Nigam and Bharat Electronics Limited (BEL) also traded in the green.
What are DAC’s Major Approvals?
The Defence Acquisition Council (DAC), a key authority for approving major capital purchases for the Armed Forces, granted Acceptance of Necessity (AoN) for 10 acquisition proposals in its recent meeting chaired by Defence Minister Rajnath Singh.
The approved projects encompass Future Ready Combat Vehicles (FRCVs) and Air Defence Fire Control Radars for the Army, as well as Dornier 228 aircraft, Next Generation Fast Patrol Vessels, and Offshore Patrol Vessels for the Indian Coast Guard.
Antique Maintains ‘Buy’ Call
Following the approvals, Antique Broking reiterated its ‘buy’ recommendation for HAL, BEL, Bharat Dynamics, Mazagon Dock, and Garden Reach Shipbuilders. The firm emphasized the substantial opportunity for Indian defence manufacturers, noting that 99% of the total AoN cost will be covered by Indigenous sources under the Buy (Indian) and Buy (Indian-Indigenously Designed, Developed, and Manufactured) categories.
What Are The Key Defence Projects?
Among the approved projects, the long-awaited procurement of Future Ready Combat Vehicles (FRCVs) is set to modernize the Indian Army’s tank fleet. These advanced Main Battle Tanks will provide superior mobility, all-terrain capability, multi-layered protection, precision targeting, lethal firepower, and real-time situational awareness.
Additionally, the Air Defence Fire Control Radars will enhance the detection and tracking of aerial targets, providing accurate firing solutions. The DAC also approved a proposal for the Forward Repair Team (Tracked), which will enable in situ repairs during mechanised operations.
For the Indian Coast Guard, the DAC approved the acquisition of three major capabilities: additional Dornier 228 aircraft, Next Generation Fast Patrol Vessels capable of operating in rough weather conditions, and Next Generation Offshore Patrol Vessels with advanced technology and enhanced long-range operations.
Significance of AoN
While an AoN marks the initial step in the defence procurement process, it does not guarantee a final order. However, the approvals signal the government’s commitment to strengthening the country’s defence capabilities and present a significant opportunity for domestic defence manufacturers.
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