Which Companies Manufacture Defence Equipment in India?

The Indian defence industry is undergoing a seismic shift. Once focused solely on safeguarding its borders, it's now morphing into a high-tech powerhouse, fuelled by a burning desire for self-reliance and a booming export market.

Gone are the days of dependence on imports. This sector is experiencing explosive growth, attracting investors and shattering records.

India's defence exports are a prime example, reaching an unprecedented Rs 210.8 billion (bn) in FY24. This surge signifies not just growth, but a new level of sophistication. The industry is no longer just a shield - it's a global force, exporting its prowess to over 85 countries.

This transformation is driven by a diverse ecosystem of companies. From aerospace giants, crafting futuristic war machines, to manufacturers meticulously forging the backbone of defence equipment, these companies are the building blocks of India's strategic security.

Recent Growth of the Defence Sector

In the Interim Budget for 2024-25, the Defence Research and Development Organisation (DRDO) received US$ 2.9 bn, with a US$ 12 bn long-term corpus for Deep Tech to support innovation in domestic defence technologies.

Several factors have driven this increase in defence expenditure. Geopolitical tensions, such as the standoff with China in Ladakh and the observed underperformance of Russian equipment in Ukraine, have been significant contributors.

The situation in Ukraine highlighted three critical insights for India:

1. Foreign equipment availability can be restricted during crises, as seen with Russia's reliance on parts from unwilling suppliers.
2. Russian equipment, heavily used by India's armed forces, underperforms compared to Western systems.
3. Western equipment is high-quality but costly and hard to mass-produce quickly, leading to slow supplies to Ukraine.

Thus, the Indian government is emphasising 'Make in India' for defence production.

As of 2022, India ranked fourth globally in defence expenditures and has set an ambitious target to achieve annual defence exports worth Rs 500 bn or about US$ 6 bn by 2028-29.

Now, let's delve into the top defence manufacturing companies in India.

#1 Hindustan Aeronautics

Leading the list is Hindustan Aeronautics.

Hindustan Aeronautics is an Indian public-sector aerospace and defence company.

Established on 23 December 1940, HAL is one of the oldest and largest aerospace and defence manufacturers in the world.

The company develops, designs, manufactures, and supplies aircraft, helicopters, avionics, and communications equipment for military and civil markets.

The following are the aircraft services offered by HAL.

In its helicopter programs, HAL has developed the Dhruv Advanced Light Helicopter (ALH), a versatile aircraft used for various military applications including transport, reconnaissance, and medical evacuation.

Additionally, HAL produces the Light Combat Helicopter (LCH), designed for high-altitude warfare and equipped with advanced weaponry and systems to support the Indian Army and Air Force in hostile environments.

The company also manufactures the Light Utility Helicopter (LUH), which is intended to replace the ageing Chetak and Cheetah helicopters in the Indian armed forces, providing a modern, agile platform for diverse utility roles.

It also develops and integrates advanced avionics systems, including navigation, communication, radar, and electronic warfare systems, enhancing the capabilities and survivability of its aircraft and helicopters.

Almost 80%of the fleet of the defence forces is either supplied by HAL or serviced and supported by HAL.

In all, the company has manufactured over 4,100 aircraft and over 5,000 engines while overhauling 11,000 aircraft and 33,000 engines across its 20 production divisions and 11 research and design centres spread across the country.

It is aggressively pursuing exports by leveraging its range of indigenous products, particularly highlighting the capabilities and safety of platforms like LCA Tejas.

It is eyeing exports to countries including Argentina, Nigeria, Egypt, and the Philippines, which are interested in the light combat aircraft (LCA) Mk-1A and the advanced light helicopter (ALH).

The company recently won an order to supply two Hindustan-228 commuter aircraft.

For more, check out our detailed editorial on HAL.

#2 Mazagon Dock Shipbuilders

Next on the list is Mazagon Dock Shipbuilders.

From starting a small shipbuilding dock to manufacturing submarines, Mazagon Dock has established itself as warship giant in India.

The company, owned primarily by the Indian government, makes everything from cargo vessels to offshore platforms and destroyers, frigates, corvettes and submarines. It is the country's largest shipbuilder, both in terms of revenue and order book.

Mazagon Dock Shipbuilders holds a unique position as the sole company in India, specialising in building conventional submarines and destroyers for the Indian Navy.

It has been tasked with manufacturing some of the Indian Navy's most ambitious programmes, including its Scorpene class of submarines and the Visakhapatnam and Kolkata class destroyers.

The company's offerings span a diverse range, from naval ships and submarines to ferries and cargo vessels. The company currently has a large library of designs for a variety of items for both domestic and foreign customers.

MDL has constructed 801 vessels since 1960, including 27 warships, advanced destroyers, missile boats, and seven submarines.

It is currently awaiting approval from the Indian government for a submarine project worth Rs 200 bn for manufacturing three more submarines, the first of which was inducted in 2017.

The Navy has a fleet requirement of around 175 ships, which includes next-generation destroyers, next-generation corvettes and some frigates.

The projects may not necessarily be awarded to Mazagon Dock, despite its expertise. It has to compete with other government shipyards, as well as with the privately owned L&T for new projects.

Both Mazagon Dock and L&T are shortlisted for the Indian Navy's P75I project, which involves manufacturing six more submarines with an air-independent propulsion system (AIP) and lithium-ion batteries.

Further, the Ministry of Defence is in the process of approving the additional procurement of three more units of Scorpene-class submarines after the general elections of 2024.

For now, though, Mazagon Dock has its hands full. The company is already manufacturing four frigates under Project 17 Alpha, with the first of the deliveries starting this year in addition to delivering the last of the Scorpene submarines.

Going forward, it is planning to develop a greenfield shipyard at Navi Mumbai with a ship lift, wet basin, workshops, and ship repair facilities.

For more details, see the Mazagon Dock Shipbuilder company fact sheet and quarterly results.

#3 Bharat Electronics

Next on the list is Bharat Electronics.

Bharat Electronics (BEL) is a Navratna defence PSU.

Established in 1954 in association with CSF France, the company is now a government aerospace and defence company. The government of India holds a 51.1% stake in the company.

It's a frontrunner in the field of defence electronics. The company is the dominant supplier of radar, communication, and electronic warfare equipment to the Indian armed forces.

The company heavily relies on the Indian defence sector, constituting about 87% of its revenue.

For the armed forces, it makes critical components of missiles, radars, aircraft sensors, sonars, electronic warfare systems, and more.

Recent diversifications include arms & ammunition, seekers & missiles, network & cyber security, and unmanned systems.

BEL's electronics are integrated into various Indian-made defence platforms like fighter jets, warships, submarines, and communication networks. When it comes to India's critical defence needs, there is no replacing Bharat Electronics.

Bharat Electronics is one of the biggest beneficiaries of the government's decision to put defence items under import embargo as a part of Aatmanirbhar Bharat.

As of 1 April 2024, the total order book of BEL stands at around Rs 760 bn, providing revenue visibility for the next couple of years. In the financial year 2023-24, BEL secured orders worth around Rs 350 bn.

Moreover, BEL's pipeline of fresh orders remains healthy, supported by the government's growing capital budget allocation and continued focus on rolling out reforms to increase India's defence product manufacturing capability and gradually reduce imports.

For more details, see the Bharat Electronics company fact sheet and quarterly results.

#4 IdeaForge Technology

Next on the list is IdeaForge Technology.

IdeaForge is a prominent name in the drone industry. The company is contributing to India's defence sector with innovative unmanned aerial vehicles (UAVs).

The company's drones are used for border security, monitoring sensitive areas, and providing critical situational awareness during military operations. IdeaForge's UAVs assist in detecting and tracking threats and ensuring enhanced security for defence installations.

The company's UAVs are compact and easy to carry. They can be deployed quickly even from small spaces. These drones would then conduct detailed mapping and surveillance of the area.

These UAVs are built to military standards and have a very low aural signature. They can hover almost undetected at a comfortable height and survey key areas safely without alerting enemies.

This helps in conducting live reconnaissance in hostile sections or to give an all-clear of an intended movement path.

IdeaForge collaborates closely with the Indian Army, Navy, and paramilitary forces, supplying UAVs that enhance their operational capabilities.

The company also works with the Defence Research and Development Organisation (DRDO) for developing and testing new UAV technologies.

IdeaForge has partnered with several technology firms to integrate advanced features into their drones, such as AI-driven analytics and enhanced communication systems. Collaborations with global defence companies help IdeaForge stay at the forefront of UAV technology and expand its market reach.

IdeaForge aims to expand its footprint in the defence sector by introducing newer models of UAVs with enhanced capabilities.

For more details, see the IdeaForge Technology company fact sheet and quarterly results.

#5 Premier Explosives

Next on the list is Premier Explosives.

Premier Explosives is engaged in manufacturing industrial explosives and detonators.

The company serves the defence sector and manufactures propellants for tactical and strategic missiles like Astra, Akash, LRSAM, Agni, and Veda.

The company undertakes the operation and maintenance of propellent plants at Sriharikota Centre and the solid fuel complex of DRDO.

It has a wide product portfolio with a monopoly in several products through which it serves its clients, including DRDO, Bharat Dynamics, Coal India, ISRO, Bharat Electricals, and Advanced Systems Laboratory.

The company has a strong domestic presence and also exports to several countries, including Israel, Greece, Jordan, Nepal, Turkey, Indonesia, Thailand, and the Philippines.

The company, although a small player when compared to its competitors, has made its mark in the industry. It has a leadership position in India in manufacturing explosives and detonating fuses with indigenous technology.

Moreover, it is the first private company to manufacture propellants for Indian missile programs. The company is a member of the Missile Technologies Control Group (MTCR), India, which provides it access to advanced technologies.

It has collaborated with universities such as BITS Pilani, Gulbarga University, and IIT Madras to conduct research in high-energy materials.

It has invested in R&D and is working on developing new products, such as 70 mm rockets and air-glide bombs for the Indian Air Force.

Going forward, these are the steps taken by the company to enhance their product offering.

For more details, see the Premier Explosive's company fact sheet and quarterly results.

#6 Bharat Dynamics

Next on the list is Bharat Dynamics.

From manufacturing missiles for original equipment manufacturers and working in close collaboration with DRDO, Bharat Dynamics has gradually moved into R&D and engineering functions to help Indian armed forces acquire a cutting edge for current and future wars.

Bharat Dynamics, incorporated as a PSU under the Ministry of Defence, manufactures guided missile systems and allied equipment for the Indian Armed Forces.

Since its inception, BDL has been working in collaboration with DRDO & foreign original equipment manufacturers (OEMs) for the manufacture and supply of various missiles and allied equipment to the Indian Armed Forces.

The company also extends expertise in developing and manufacturing advanced launchers for the deployment of its missile systems.

The company expects Rs 50 bn worth of additional orders in the next couple of quarters.

Further, with Defence Acquisition Council (DAC) approved proposals worth Rs 845.6 bn to enhance the operational capabilities of the Indian armed forces, the company is set to benefit from it.

In fact, the company has benefited significantly from government policies that promote the domestic production of defence equipment, contributing to its positive performance.

Going forward, the company is poised to enter new avenues of manufacturing covering a wide range of weapon systems across its three manufacturing units.

For more details, see the Bharat Dynamics company fact sheet and quarterly results.

#7 High Energy Batteries

Next on the list is High Energy Batteries.

High Energy Batteries (India) Limited is engaged in the business of manufacturing Hi-Tech batteries for use in Army, Navy, Airforce, and launch vehicles and also commercial batteries for auto and standby VRLA applications.

The company manufactures high-value silver zinc batteries and nickel cadmium batteries. The main customers of the company are the Army, Navy, and Air Force. The company supplies its batteries to various defence applications such as aircraft batteries, torpedo batteries, missile batteries, and helicopter batteries.

The company has developed and supplied nickel cadmium batteries for the Indian Air Force and Indian Navy for use in Jaguar, Mirage, Sea King, Sukhoi, Kiran MKI, Kiran MKII, AN32, Sea Harrier, and more.

A strategic partnership with the Indian government's defence ministry forms the backbone of the company's revenue. Their silver-zinc batteries are crucial for various defence needs.

The company plans to prioritise modern technologies in developing these batteries for future defence applications.

For more details, see the High Energy company fact sheet and quarterly results.

#8 L&T

Next on the list is L&T.

L&T's defence journey started in the mid-80s, way before the defence sector was opened up to the private sector in 2001.

The company is also one of the leaders in industry 4.0 adoption, having adopted industry 4.0 across its engineering and manufacturing plants in India.

The recent K9 Vajra-T programme, where 100 K9s were delivered as per a Rs 45 bn defence contract to the Army, is a case of its use of industry 4.0 and automation capabilities.

L&T's subsidiary, L&T Defence is a small part of the whole, bringing in 2-3% of the total group revenues in the projects and manufacturing segment.

But within the private sector in defence in India, it is one of the major players with a gamut of offerings covering everything from ships and submarines to land combat vehicles, radar systems, and PSLV rockets. The light tank is just one of several projects and contracts the company currently has under its belt.

L&T Defence is one of the few private companies worldwide to possess niche submarine manufacturing capabilities..

The company has contributed to manufacturing India's first Arihant-class nuclear-powered ballistic missile submarine (SSBN), which is pivotal in maintaining the country's strategic sea-based nuclear deterrence.

The company is also executing a contract for two multi-purpose vessel ships and has finalised a contract for the supply of 61 flights of an indigenously developed close-in weapon system to the Indian Air Force for the protection of vital assets and positions.

For more, check out L&T's fact sheet and quarterly results.

#9 Astra Microwave

Next on the list is Astra Microwave.

The company is involved in designing, developing and producing crucial sub-systems for its customers for building various aerial, naval and ground-based systems. The company produces equipment for radar electronics, electronic warfare, and strategic electronics & telemetry.

This segment remains the most revenue-generating vertical, accounting for 55% of the total revenue in FY23.

The company earns revenue from two main sources:

1. DRDO Contracts: AMPL develops components for defence equipment designed by DRDO. After the armed forces' approval, DRDO transfers technology to defence PSUs, which then order the components from firms like Astra Microwave.
2. Exports: Due to the defence offset policy, foreign vendors must source at least 30% of large orders from Indian manufacturers. This ensures that it receives significant export orders. Additionally, the company supplies components to the Indian Space Research Organisation (ISRO).

Recently, Astra Microwave and Teledyne e2v HiRel Electronics entered into a collaboration agreement to provide semiconductor services to support aerospace, defence, and high-reliability electronics markets.

Earlier, the company received a contract to supply, install, test and commission a Precision Approach Radar (PAR) system for Hindustan Aeronautics.

Going forward, the company plans to focus on Active Electronically Scanned Array (AESA) radars for superior detection and tracking capabilities.

For more details, see the Astra Microwave company fact sheet and quarterly results.

#10 Cochin Shipyard

Next on the list is Cochin Shipyard.

Cochin Shipyard is a government-owned company and India's largest public-sector shipyard by capacity. It stands as a unique player to ride the potential in India's defence manufacturing space.

While registered as a commercial shipyard, a significant portion of CSL's revenue comes from building and repairing defence vessels. This experience and expertise make them a trusted partner for the Indian Navy's shipbuilding needs.

The company has constructed a wide range of warships, including destroyers, corvettes, anti-submarine warfare (ASW) shallow water crafts, and auxiliary vessels, making them a unique player in defence space.

Some of its clients are the Indian Navy, the Indian Coast Guard, the Shipping Corporation of India, and the National Petroleum Construction Company (Abu Dhabi).

Recently, Cochin Shipyard received an order from a European client to design and build one Hybrid Service Operation Vessel (SOV) with an option for two more such vessels.

Going forward, it is building a new dry dock and a 600-ton gantry crane for handling vessels to expand its shipbuilding and repair capabilities.

It is expanding the international ship repair facility (ISRF) at Cochin by adding a ship lifting facility to undertake more complex ship repair orders and improve its ship repairing revenue.

The company is also setting up a modernised shipbuilding facility in West Bengal to build ships and vessels.

Its CRUISE 2030 plan aims to focus on the defence sector, coastal, and small vessel segments by tapping emerging technologies and building autonomous vessels, hybrid or battery-operated vessels, and vessels that run on alternate fuels.

As a part of this plan, it recently acquired Temba Shipyards, which specialises in deep-sea fishing vessels.

For more details, see the Cochin Shipyard company fact sheet and quarterly results.

#11 Paras Defence & Space Technologies

Next on the list is Paras Defence and Space Technologies.

The company specialises in technologies needed for rockets and missiles, space research, naval systems, electronic warfare, drones, and quantum communication, among others.

Paras Defence currently counts the likes of DRDO, ISRO, defence shipyards, Hindustan Aeronautics, Larsen & Toubro, and the Tata group among its key customers.

The company stands among the few companies in India that specialise in the high-end manufacturing of electronics and optronics for defence and space applications.

The following are the defence engineering products and solutions in the electronics segment offered by Paras Defence.

Paras Defence has been growing as a sub-system supplier in the Indian defence industry and is involved in some of the key aerospace and defence projects commissioned by the Indian government.

In the last few months, the company has bagged contracts for supplying submarine optronic periscopes for the Indian Navy and supplying the complete glass avionic suite for the Saras MK2 in March 2023.

Paras Defence also provides various defence systems and components in areas including electronic warfare (EW) and surveillance, electromagnetic shielding, armoured vehicles, and naval, and space products. This diverse expertise enables the company to advance up the value chain, positioning it to foray into markets offering comprehensive products and solutions in the future.

It has offerings beyond typical defence equipment, like drones, radio frequency (RF) & microwave components, and anti-drone systems. 70% of its revenues come from the defence engineering business.

The core strength of the company is a strong emphasis on research and development (R&D). It has capabilities to indigenously design, develop and manufacture turnkey solutions for the defence sector.

Further, in 2024, the company incorporated a subsidiary, Mechtech Thermal to design, develop and validate thermal products for the aviation, defence, and space sectors.

For more details, see the Paras Defence & Space Tech company fact sheet and quarterly results.

#12 Garden Reach Shipbuilders

Next on the list is Garden Reach Shipbuilders

Garden Reach Shipbuilders and Engineers is another leading shipbuilding entity that caters to the needs of the Indian Navy and the Indian Coast Guard.

The company boasts a diverse portfolio and a notable achievement as the pioneer shipyard in India to export warships. It has successfully delivered a tally of 100 warships to the Indian Navy and Indian Coast Guard.

The company last week was declared as the lowest bidder (L1) by the Defence Research and Development Organisation (DRDO) for the construction of a research vessel for a consideration of Rs 5 bn.

In addition, it has recently entered into a contract with the Bangladesh Inland Water Transport Authority (BIWTA) for the procurement of one trailing suction hopper dredger.

It also bagged a purchase order for the manufacturing and supply of a 1 KW HF system.

The high frequency (HF) system serves a crucial purpose in maritime communications. It facilitates highly secured, seamless, long-range communications over satellite and the HF medium for net-centric operations of defence forces on both land and seas.

Going forward, the company anticipates a promising future with the initiation of Next-Generation Offshore Patrol Vessels (NGOPVs) and deliveries for naval projects.

For more details, see the Garden Reach Shipbuilders & Engineers company fact sheet and quarterly results.

#13 Taneja Aerospace

Next on the list is Taneja Aerospace.

This small-cap defence company, manufactures various parts and components for the aviation industry, providing services related to airfield and maintenance, repair and operations (MRO) and allied services.

The company manufactures aerostructures, crucial components for the airframes of military aircraft. They supply these parts to major Indian defence organisations like Hindustan Aeronautics (HAL), the Indian Air Force, and the Indian Navy.

The company specialises in modifying defence helicopters and aircraft for specific military applications. This could involve adding weaponry systems, improving communication capabilities, or enhancing operational performance for various terrains.

Going forward, the company plans on manufacturing components for new-generation helicopters.

For more details, see the Taneja Aerospace company fact sheet and quarterly results.

#14 Bharat Forge

Next on the list is Bharat Forge.

Bharat Forge is a key manufacturer of critical components for various defence platforms. The company produces essential parts for military aircraft, including airframe components, structural elements, and engine parts.

Additionally, it supplies key components for tanks, armoured personnel carriers (APCs), and other combat vehicles.

Bharat Forge is currently setting up a new factory in Jejuri, Pune district, which will be operational within a month.

This facility will feature a production line for vehicles such as the M4, a vehicle highly regarded by the Indian Army, which Bharat Forge is supplying domestically and exporting. Another production line will focus on tracked vehicles, including tanks. The company is developing futuristic infantry combat vehicles (FICVs) and a light tank weighing under 25 tonnes.

The company has a robust order book worth Rs 50 bn, with 80% of these orders destined for export. In the past few months, Bharat Forge secured export orders valued at US$ 5-6 bn. Last year, the company achieved Rs 14 bn in defence-related business, a figure expected to grow by more than 50% in FY25.

Looking ahead, Bharat Forge is poised to develop main battle tanks to meet future requirements of the Indian Army.

For more details, see the Bharat Forge company fact sheet and quarterly results.

#15 Data Patterns

Last on the list is Data Patterns.

The company specialises in designing and manufacturing electronic systems and solutions, with a focus on indigenous development.

The company's extensive product range caters to all defence and aerospace platforms, including land, sea, air, and space.

Data Patterns boasts a 100% in-house development and manufacturing capability and maintains a diversified order book with marquee customers.

The company has supplied products for significant projects such as the LCA-Tejas, Light Utility Helicopter, and BrahMos missile.

Data Patterns is a key player in the electronic warfare sector, producing systems that disrupt or manipulate enemy electronic communications and radar systems.

They manufacture surveillance and intelligence gathering systems (SIGINT, COMINT, and ELINT) and a variety of radars crucial for detecting and tracking aircraft, ships, and missiles. Their radar products include surveillance radar, weather radar, and coastal surveillance radar.

The company operates in diverse defence markets, supported by initiatives like Aatmanirbhar Bharat, positive intergenerational, and the military modernization plan.

These initiatives will ensure a boost Data Patterns' performance in the evolving military industry landscape.

Looking ahead, Data Patterns expects to secure orders worth Rs 10 bn from the defence sector in FY25. While a significant portion of their current work comes from the Defence Research and Development Organisation (DRDO), the company is shifting towards building complete systems. This transition will increase direct business from the Ministry of Defence (MoD).

For more details, see the Data Patterns company fact sheet and quarterly results.

Conclusion

Investing in defence stocks presents a compelling opportunity due to several factors. First, global geopolitical tensions and the increasing focus on national security ensure consistent demand for defence products and services.

Governments worldwide continue to allocate significant portions of their budgets to defence spending, ensuring a steady revenue stream for defence companies.

India has set a defence export target of Rs 350 bn by 2024-25. This drive for increased exports aligns with a significant emphasis on the indigenisation of weaponry and systems.

These include imposing phased bans on the import of weapons, creating a separate budget for buying locally made military hardware, increasing foreign direct investment from 49% to 74%, and improving ease of doing business.

India is eyeing a turnover of Rs 1.8 trillion (tn) in defence manufacturing by 2024-25.

On 4 October, India slapped an import ban on 98 weapons and systems, including futuristic infantry combat vehicles, ship-borne unmanned aerial systems, medium-range precision kill systems, radars, sensors, and equipment for fighter jets, maritime surveillance planes, warships, helicopters, and tanks.

The fifth positive indigenisation list, released by Defence Minister Rajnath Singh, took the number of major defence items placed under an import ban during the past three years to 509.

All being said, the stock market is a tricky place. Top Defence sector stocks, like other sectors, are influenced by economic conditions and market fluctuations.

You need to look out for a fundamentally strong defence company to make the most of the current opportunity.

Get started by using Equitymaster's stock screener to filter the best defence stocks in India.

Happy Investing!

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