India’s defence sector is undergoing a major shift from import dependence to domestic manufacturing and exports, creating strong opportunities for local companies. A recent Rubix report says defence production in India rose from Rs 500 billion in FY15 to a record Rs 1.54 trillion in FY25, with the government targeting Rs 3 trillion by FY29. Defence spending has also increased sharply, with the budget tripling since FY14 to Rs 7.8 trillion in FY27, making it the largest allocation among all ministries and accounting for 14.7% of the Union Budget. In FY25, the Ministry of Defence signed 193 contracts worth Rs 2.1 trillion, with 92% of contracts by volume and 81% by value going to domestic companies. Around 65% of defence equipment is now made in India, reversing a previous 65-70% import dependence. Defence exports also hit a record Rs 384.2 billion in FY26, and India aims to reach Rs 500 billion by FY29, supplying equipment to more than 80 countries.
Against this backdrop, five defence stocks are highlighted for their expanding order books, capacity additions, and new product pipelines.
Solar Industries is building a strong defence business across rockets, missiles, drones, loitering munitions, and counter-drone systems. Defence accounted for 24% of revenue in 9MFY26, up from 18% in FY25. The company’s defence order book is above Rs 180 billion, including about Rs 110 billion from exports and Rs 70 billion from domestic orders. A major domestic contract is the Pinaka enhanced range rocket and area denial munitions order worth Rs 60.8 billion. Solar is also developing 155 mm ammunition and expanding into UAVs, counter-UAS systems, and proximity fuses. It has signed an MoU with Maharashtra for a mega defence and aerospace project in Nagpur involving an investment of Rs 127 billion over 10 years.
Apollo Micro Systems is moving toward becoming a full weapon system manufacturer. It supplies subsystems for many DRDO programs and recently acquired IDL Explosives, allowing backward and forward integration into complete systems such as missiles, torpedoes, aerial bombs, and mines. The company also received a lifetime arms manufacturing licence in April 2026.
Zen Technologies has expanded beyond simulators into counter-drone systems, drones, robotics, and automated weapons stations. It is launching new products such as the HyperStrike interceptor drone and expects strong export growth.
Garden Reach Shipbuilders is benefiting from a strong naval pipeline, while Bharat Electronics continues to lead in defence electronics and is positioned for large upcoming orders in missile, radar, and air defence programs.
