Budget 2024: How The Defence Sector Stands To Benefit

The government of India, on Thursday, hiked its defence budget by 4.5% to Rs 6.21 lakh crore for FY25 from last year's allocation of Rs 5.94 lakh crore.

Additionally, in line with the country's 'Make-in-India' initiative and focus on improving domestic manufacturing and production of defence products and technology, Finance Minister Nirmala Sitharaman also announced a new scheme to encourage research and development in the sector.

The interim Union budget has set aside Rs 1.72 lakh crore for capital expenditure on the military, up 6.2% from the Rs 1.62 lakh crore allocation made last year.

The capital expenditure largely includes purchasing new weapons, aircraft, warships and other military hardware.

The total revenue expenditure has been set at Rs 4,39,300 crore, of which Rs 1,41,205 crore would be put aside for defence pensions, Rs 2,82,772 crore for defence services, and the remainder of Rs 15,322 crore for the Ministry of Defence (Civil).

The revenue expenditure for the Indian Army has been pegged at Rs 1,92,680 crore for FY25, while the Navy and the Indian Air Force were allocated Rs 32,778 crore and Rs 46,223 crore, respectively.

The defence services capital outlay for aircraft and aero engines is Rs 40,777 crore, while a total of Rs 62,343 crore was allocated for 'other equipment'.

An outlay of Rs 23,800 crore has also been made for the naval fleet and Rs 6,830 crore for naval dockyard projects.

In the interim Budget 2024, the FM also announced that the government will launch a scheme for 'deep-tech' technologies in the military domain.

Among the defence stocks, the newly announced scheme could have a positive impact on companies like Hindustan Aeronautics Ltd., Ashok Leyland Ltd., Zen Technologies Ltd., Mazagon Dock Shipbuilders Ltd., and other stocks that heavily spend on research and development facilities and products.