New Delhi, India
The Department of Defence Production (DDP), under the Ministry of Defence, has notified its sixth Positive Indigenisation List (PIL), adding 405 strategically important items to the list of defence equipment that must be sourced exclusively from Indian industry. According to brokerage PL Capital, state-owned Bharat Electronics Limited (BEL) and Hindustan Aeronautics Limited (HAL) account for 77% of the items on the new list, with the remaining 92 items open to competition among smaller listed defence vendors, MSMEs and private manufacturers.
The list carries an estimated business potential of ₹3,070 crore. Of the 405 items, 16 are designated for the Indian Coast Guard and 389 for Defence Public Sector Undertakings (DPSUs).
What’s on the List
The sixth PIL spans Line Replaceable Units, sub-systems, sub-assemblies, spares, components and raw materials across a wide range of platforms. Items linked to HAL include components for the Advanced Light Helicopter, Light Utility Helicopter, Su-30MKI, Light Combat Aircraft and AL-31FP engines. BEL-linked items include critical electronic systems, thermal imagers and fire control systems for armoured platforms such as the T-72, T-90 and BMP-II. Items associated with Bharat Dynamics Limited (BDL) include the Konkurs-M and Invar anti-tank guided missile systems and the MRSAM air defence system. The list also covers warship-related components.
Once successfully indigenised, these items can only be procured from Indian industry going forward. DPSUs and the Indian Coast Guard will pursue indigenisation through multiple routes, including the Ministry’s “Make” procedure and in-house development, with participation from domestic industry, particularly MSMEs.
Analyst Take
PL Capital’s Amit Anwani, Vice President and Research Associate for Institutional Research, said BEL and HAL are the “key beneficiaries” of the sixth PIL, noting both companies already have the highest share of items notified for indigenisation and have taken steps to deepen domestic sourcing ahead of the announcement. He pointed to BEL’s sustained R&D investment, its strengthened vendor ecosystem built through MSME partnerships, and its dedicated Indigenisation Cell supporting the government’s Atmanirbhar Bharat objectives.
PL Capital rates HAL a “Buy” with a target price of ₹5,795, and BEL “Accumulate” with a target of ₹452.
Other brokerages and market commentary flagged the concentration risk embedded in the list: with BEL and HAL controlling more than three-quarters of notified items, the near-term opportunity is not evenly distributed across India’s broader defence manufacturing ecosystem, leaving a comparatively small pool of 92 items for MSMEs and smaller private vendors to compete over.
Company Financials
Bharat Electronics reported consolidated revenue of ₹5,547 crore in Q1 FY27, up 24.94% year-on-year, though EBITDA margin compressed to 25.11% from 28.0% a year earlier due to product mix variation and higher material consumption during the quarter. Hindustan Aeronautics reported Q1 FY27 revenue of ₹5,515 crore, up 14.45% year-on-year but down 60.44% quarter-on-quarter, with net profit of ₹1,590 crore compared with ₹1,384 crore in the same quarter last year.
Analysts note that previous indigenisation lists have historically taken several quarters to convert into firm contracts, suggesting the near-term earnings impact on BEL and HAL from this list specifically is likely to be limited. Historically, indigenised sub-systems have carried better realisations than import-linked assembly work, meaning margin improvement from such orders, when they materialise, has tended to show up before revenue growth does.
Track Record of Previous Lists
The DDP reports that more than 15,700 defence items have been successfully indigenised over the past five years, resulting in estimated import substitution of approximately ₹9,000 crore. DPSUs have also placed procurement orders, including for in-house production worth roughly ₹10,000 crore with domestic vendors through March 2026.
The Positive Indigenisation List mechanism was introduced under the Defence Acquisition Procedure 2020. The fifth PIL, notified earlier, had featured 346 items following successful indigenisation of 2,972 of 4,666 items from the previous four lists. The SRIJAN Defence Portal, launched in August 2020, continues to serve as the platform connecting DPSUs and Service Headquarters with domestic industry; as of June 2026, more than 33,000 items had been identified and offered for indigenisation through the portal.
Market Reaction
Defence sector stocks rallied following the announcement. Paras Defence and Space Technologies gained as much as 10% intraday, while Zen Technologies rose 7–8%. Garden Reach Shipbuilders & Engineers (GRSE), Data Patterns, Dynamatic Technologies and Aequs also saw buying interest. The Nifty India Defence Index was up around 1.3% intraday, reflecting broad-based investor interest across the sector following the list’s notification.
Broader Context
The announcement comes as India’s defence manufacturing sector continues its multi-year structural shift. According to PL Capital’s separate sector-wide commentary, indigenisation is increasingly moving from complete platform assembly toward high-value sub-systems, semiconductors, processors, seekers, sensors and mission-critical electronics, widening the opportunity for specialised component suppliers rather than large platform integrators alone. Roughly 75% of India’s defence capital procurement is currently reserved for domestic sourcing.
Government data shows defence production reached ₹1.78 lakh crore in FY26, up from ₹46,429 crore in FY15, while defence exports grew from ₹686 crore in FY14 to ₹38,424 crore in FY26, with the private sector contributing ₹17,353 crore (45.16%) of exports and DPSUs contributing ₹21,071 crore.