Defence stocks jumped up to 16% after Rajnath backed private sector growth.
Government targets raising private defence manufacturing share to nearly 50%.
Policy reforms and localisation push boosted defence sector investor sentiment.
Shares of private defence companies rallied sharply on Monday, with select stocks rising up to 16%, after Defence Minister Rajnath Singh said the government aims to significantly increase private sector participation in India's defence manufacturing ecosystem.
The rally came after Singh said the contribution of private firms in defence production, which was negligible a few years ago, has now reached 25-30%, with the government targeting an increase to nearly 50% going forward.
1 May 2026
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Among individual stocks, Apollo Micro Systems emerged as the top gainer, rising 15.63% during afternoon trade. Astra Microwave Products and Paras Defence and Space Technologies climbed 5.53% and 5.28%, respectively.
Meanwhile, DCX Systems gained 4.3%, while Data Patterns advanced 3.36%. The Nifty India Defence index traded 1.38% higher during the session.
Private Sector To Play Bigger Role
Speaking after inaugurating an ammunition manufacturing facility in Shirdi, Singh said the role of private companies in defence manufacturing has evolved significantly over the years.
"The private sector is not just a supplier of nuts and bolts in defence, but also a producer of state-of-the-art weapons systems," he said.
Singh added that India, once considered among the world's largest arms importers, now has the potential to emerge as a leading defence exporter over the next 25-30 years. He noted that stronger collaboration between government vision and private sector innovation could take India's defence capabilities to new levels.
Policy Reforms Driving Growth
The minister highlighted reforms undertaken to increase private participation in defence manufacturing, including foreign direct investment liberalisation and the strategic partnership model.
He also referred to the government's positive indigenisation list of nearly 5,000 items that now require domestic procurement by armed forces. Singh added that startups and young innovators are also being encouraged to participate in the ecosystem.
According to Singh, private companies historically had limited opportunities because the sector was largely restricted to public sector undertakings and ordnance factories.
Singh said India is witnessing a new phase in defence and space manufacturing under the self-reliance push. During the event, India's first 300-km Universal Rocket Launching System, Suryastra, was also flagged off and a missile complex foundation stone was laid.
He said future conflicts would increasingly depend on technology, munitions and automation capabilities rather than force size alone, pointing to developments in the Russia-Ukraine conflict and West Asia.
