Defense Stocks Extend Rally; Reports Of Rafale Jet Deal Boost Investor Interest

The Nifty India Defence index was up 2.1% in afternoon trade, with all 18 constituents trading in the green. GRSE led the line, gaining over 7%, while Zen Technologies rose 4%. Cochin Shipyard (+3.8%), Unimech Aerospace and Manufacturing (+3.4%), and Data Patterns (+2.8%) made up the top five gainers on the index.

Rafale Jets Mega Deal

The Indian Air Force (IAF) is preparing to secure a contract for 114 Rafale fighter jets as early as the next fiscal year, according to a report by The Print. The deal is expected to include the immediate delivery of at least 18 aircraft, featuring ‘Made-in-India’ components, to accelerate deployment timelines.

French aerospace major Dassault Aviation is likely to establish a final assembly line in India as part of the agreement, with a target of achieving 60% indigenisation.

This aligns closely with India’s push for self-reliance in defence manufacturing and boosting domestic production capacity.

Earlier this year, reports indicated that the government had scrapped the Multi-Role Fighter Aircraft (MRFA) programme to pursue a direct government-to-government agreement with France for the Rafale jets. The IAF has since prepared a detailed proposal, which has been submitted to the Ministry of Defence, the report read.

The plan is currently under review by different divisions, including Defence Finance. Once cleared, it will move to the Defence Procurement Board and then the Defence Acquisition Council for Acceptance of Necessity, paving the way for formal negotiations on one of India’s largest defence deals.

This comes after India’s Cabinet Committee on Security cleared a ₹62,000 crore order to purchase 97 light combat aircraft (LCA Mk-1A) from Hindustan Aeronautics (HAL) last month. HAL shares were trading up 1.4%.

Defense Boost

Last month, India announced a record high figure of ₹1,50,590 crore for annual defense production in FY 2024-25, marking an 18% increase from the previous year. Exports also reached a record high of ₹23,622 crore in FY 2024-25, up 12.04%.

Separately, the Defence Acquisition Council (DAC) approved capital acquisition proposals worth around ₹67,000 crore to bolster the operational capabilities of the Indian Armed Forces, including the Army, Navy, and Air Force.

Overall, defense firms have seen strong gains in 2025, with the Nifty India Defense Index rallying nearly 30%. 

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