Can Rs 79,000-crore DAC boost help HAL, BEL, other defence stocks deliver in 2026?

India's journey towards self-reliance in defence manufacturing has received a substantial boost with the Defence Acquisition Council (DAC) clearing procurements worth an impressive Rs 79,000 crore. This significant move is not just about upgrading military hardware; it's a strategic economic and national security imperative that underscores India's 'Atmanirbhar Bharat' vision. For competitive exam aspirants, understanding this development requires delving into its multifaceted implications.

Historically, India has been one of the world's largest importers of defence equipment. For decades after independence, the country relied heavily on foreign suppliers, first from the Soviet Union and later from a diverse range of global arms manufacturers. This import dependence, while ensuring military readiness, came at a significant cost: draining foreign exchange reserves, vulnerability to geopolitical pressures, and limited indigenous technological growth. The 'Make in India' initiative, launched in 2014, marked a conscious shift towards fostering domestic manufacturing across sectors, with defence identified as a critical pillar. This was further intensified with the 'Atmanirbhar Bharat Abhiyan' (Self-Reliant India Campaign) announced in May 2020, specifically targeting reduced import dependence and boosting indigenous capabilities in critical sectors like defence.

The recent DAC clearance of Rs 79,000 crore for various defence platforms and systems is a direct outcome of this policy shift. Chaired by the Defence Minister, the DAC is India's apex decision-making body for defence procurement, responsible for giving 'Acceptance of Necessity' (AoN) for proposals. This particular clearance emphasizes 'Buy (Indian – IDDM)' (Indigenously Designed, Developed and Manufactured) and 'Buy (Indian)' categories, prioritizing domestic sourcing. The identified key beneficiaries — missiles, electronics, drones, and shipbuilding — are not random; they represent critical, high-technology areas where India seeks to achieve strategic autonomy. Furthermore, the policy reforms associated with this initiative are specifically designed to nurture Micro, Small & Medium Enterprises (MSMEs) and defence start-ups, recognizing their potential for innovation and job creation.

Several key stakeholders are at play here. The **Ministry of Defence (MoD)**, through the DAC, sets the policy direction and approves procurements. **Defence Public Sector Undertakings (DPSUs)** like Hindustan Aeronautics Limited (HAL) and Bharat Electronics Limited (BEL) are major beneficiaries, receiving substantial orders that ensure long-term visibility and financial stability. These PSUs, despite historical criticisms of inefficiency, are now being pushed to modernize and compete. **Private defence players** are emerging as crucial partners, benefiting from an increasingly level playing field and government encouragement. Companies like Larsen & Toubro, Tata Advanced Systems, and Mahindra Defence Systems are poised for significant growth. Crucially, **MSMEs and defence start-ups** are being integrated into the supply chain, fostering a vibrant ecosystem of innovation and specialized manufacturing. Finally, the **Indian Armed Forces** are the ultimate beneficiaries, receiving modern, indigenously developed equipment tailored to India's unique operational requirements, enhancing their combat readiness and capabilities.

This development holds immense significance for India. Economically, it strengthens the capital expenditure upcycle, stimulating growth in manufacturing, engineering, and technology sectors. It promises significant job creation, both directly in defence industries and indirectly in ancillary sectors. Reducing import dependence saves valuable foreign exchange and builds a robust industrial base. Strategically, it enhances India's national security by reducing reliance on foreign suppliers, which can be vulnerable to geopolitical shifts or sanctions. It fosters strategic autonomy, allowing India to pursue an independent foreign policy without fear of critical defence supply disruptions. Furthermore, by developing cutting-edge technologies domestically, India moves closer to becoming a defence exporter, aligning with the targets set in the Defence Production and Export Promotion Policy (DPEPP) 2020, which aims for a turnover of Rs 1,75,000 Crore (USD 25 billion) including exports of Rs 35,000 Crore (USD 5 billion) in aerospace and defence goods and services by 2025.

From a constitutional perspective, the Union Government's power to legislate and act on 'Defence of India' is enshrined in **Entry 1 of the Union List** under the Seventh Schedule of the Indian Constitution. While specific procurement decisions are executive actions, they are guided by the larger constitutional mandate to ensure national security. The **Defence Acquisition Procedure (DAP) 2020**, which replaced DAP 2016, is the guiding policy document that meticulously details the procurement process, emphasizing indigenization, faster decision-making, and increased private sector participation. The introduction of a 'Negative Import List' for various defence items, implemented in phases since 2020, further solidifies the commitment to domestic production, effectively banning the import of certain equipment to push local industry.

The future implications are profound. This sustained focus on indigenous defence production is expected to drive significant R&D investment, leading to technological advancements across various fields. It could position India as a global hub for specific defence technologies, fostering collaborations and potentially leading to exports to friendly nations. The increased order visibility provides confidence for defence companies to invest in expansion and innovation. However, challenges remain, including ensuring quality control, timely delivery, and competitive pricing. The success of this initiative will hinge on continued policy support, robust R&D, and a dynamic partnership between the government, DPSUs, and the private sector, including MSMEs and start-ups, to truly transform India into a global defence manufacturing powerhouse. This strategic shift is not merely about defence; it's about leveraging defence spending as a catalyst for broader economic growth and national empowerment.