Indian defense stocks surged Thursday after Prime Minister Modi greenlit a $5 billion emergency military modernization fund aimed at countering Pakistan’s growing arsenal of Chinese-supplied weaponry. Public-sector giants Hindustan Aeronautics (HAL, +10%) and Bharat Electronics (BEL, +10%) led gains, while private contractor Reliance Defense (+12%) capitalized on drone supply contracts critical to India’s border surveillance strategy.
Modernization Focus:
- Drone Warfare: India to deploy 1,000 indigenous combat drones by 2026 for precision strikes and border surveillance.
- Border Infrastructure: AI-powered surveillance systems with satellite/sensor networks to monitor China-Pakistan borders in real-time.
- Domestic Production: 70% of defense parts (drones, AI chips) sourced locally under ‘Self-Reliant India’ initiative, cutting foreign dependence.
Market Dynamics:
- Foreign Partnerships: India in talks with Israel for missile tech.
- Investor Sentiment: Defense ETFs see $500M inflows this week.
Expert Take:
“India’s defense sector is a $200B opportunity over the next decade,” said Morgan Stanley’s Arvind Subramanian. “But execution risks persist.”
