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HAL's share price jumps 4% after India approves defence projects worth $1.2 billion

Aug 12, 2020, 10:16 IST
Business Insider India
India's Defence Minister Rajnath SinghBCCL

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  • The Indian government has pushed through a stack of defence projects to the tune of $1.2 billion on August
  • This comes after the Defence Acquisition Council (DAC) had already approved arms projects worth $5.5 billion last month.
  • The biggest beneficiary, Hindustan Aeronautics Limited (HAL), saw its share price jump by over 4% as markets opening today morning.
  • The entire $1.2 billion will be spent on the domestic industry with companies like Hindustan Aeronautics Limited (HAL) and Bharat Heavy Electricals Limited (BHEL) reaping the benefits.
India is spending another ₹8.7 lakh crore ($1.2 billion) on defence projects after having already having approved ₹38.9 lakh crore ($5.5 billion) for arms projects last month.


Last time around the lion’s share of the capital— around ₹31.1 lakh crore ($4.44 billion) — was directed towards the domestic industry. This time the entire amount is going to local manufacturers like Hindustan Aeronautics Limited (HAL) and Bharat Heavy Electricals Limited (BHEL). HAL's share price saw a jump over 4% as markets opened today morning.

HAL's share price since JulyBSE/BI India

BHEL's share price on the other hand remained muted showing a marginal uptake of over 1%.

BHEL share price since JulyBSE/BI India

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The projects approved by the Defence Acquisition Council (DAC) in its meeting today headed by India’s Defence Minister Rajnath Singh include new aircraft, more firepower for the Indian Navy, as well as approvals that will speed the procurement and upgrades of unmanned aerial vehicles (UAVs).

The Indian Air Force (IAF) needs more eyes in the sky
In July, the DAC approved the proposal to procure 21 new MiG-29 aircraft along with upgrading the existing 59 already enlisted with the Air Force. It also sanctioned buying 12 new Sukhoi-20 MK I aircraft.

Pushing on the narrative of Athmanibhar Bharat, self-reliant India, the government has put an order for 106 of the newly developed Basic Trainer Aircraft from HAL.

Initially, 70 of these jets will be inducted to meet the IAF’s training requirements once they receive the required certification. The remaining 36 will be picked up once the HTT-40 fleet — another trainer aircraft that HAL invested ₹550 crore to develop — is operational.

Increasing the Indian Navy’s firepower
Other than, the primary beneficiary of the DAC’s project approval is BHEL. The government has approved the procurement of an upgraded version of the Super Rapid Gun Mount (SRGM). It is the main fun onboard Navy and Indian Coast Guard warships.

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According to the government, the upgraded version of the SRGM will increase the capabilities of the warships to manoeuvre against fast-moving targets like missiles. It will also enhance the engagement range of the guns.

The Indian Army won’t be left out of the fray. It will be getting new 125 mm Armour Piercing Fin Stabilised Discarding Sabot (APFSDS) ammunition. 70% of the product will be made in India and the ammunition will be brought in under a ‘design and development case’.

Other approvals are aimed at speeding up the procurement of Indo-Russian AK 203 guns and push through faster upgrades for UAVs.

SEE ALSO:
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