DAC capital acquisition of Rs 1.4 trn to boost defence PSUs: Report

New Delhi [India], September 4 : The decision of the Defence Acquisition Council (DAC) to accept 10 capital acquisition proposals worth Rs 1.4 trn will not only boost domestic defence manufacturing but will contribute to the growth of the PSU companies in the defence sector, highlighted a report by Antique Stock Broking.
The report noted that the growth of domestic defence manufacturing in the country has picked up significantly over the last few years and is expected to grow further in the future.
It added that the government's focus on enhancing domestic capabilities is evident from its initiatives in FY24, where Acceptance of Necessity (AoN) was accorded to proposals worth approximately Rs 3.61 trillion under various capital procurement categories. These initiatives are in line with the Defence Acquisition Procedure (DAP) 2020, which strongly promotes domestic manufacturing.
"The government, in FY24, accorded Acceptance of Necessity (AoN) to proposals worth approximately INR 3.61 trn under various categories of capital procurement, which promotes domestic manufacturing as per DAP-2020" said the report.
A significant milestone highlighted in the report is the remarkable increase in the share of domestic procurement in India's defence sector. The share has improved from 54 per cent in FY19 to 75 per cent in FY24.
The report noted that this trend is expected to strengthen further, driven by the fact that more than 99 per cent of the announced proposals are to be sourced from the domestic industry under the "Buy (Indian)" and "Buy (Indigenously Designed, Developed, and Manufactured)" categories.
"The total share of domestic procurement has seen a phenomenal improvement from 54% in FY19 to 75% in FY24 and is expected to improve further.
The report stated that the DAC's (Defence Acquisition Council) approval of proposals worth Rs 1.45 trillion is aimed at enhancing the operational capabilities of the Indian Armed Forces.
The report further emphasizes that with Rs 1.45 trillion worth of projects already approved in the year-to-date FY25, the defence PSUs are poised for strong growth in the near to long term.
"With approval for Rs 1.45 trn worth of projects in YTDFY25, we believe defence PSUs have strong growth opportunities in the near to long term" the report added.
The Defence Acquisition Council (DAC), under the chairmanship of Defence Minister Rajnath Singh on Tuesday accorded Acceptance of Necessity (AoN) for 10 capital acquisition proposals amounting to Rs 1,44,716 crore.
Of the total cost of AoNs, 99 per cent is from Indigenous sources under the Buy (Indian) and Buy (Indian-Indigenously Designed Developed and Manufactured) categories, the Ministry of Defence stated.
For the modernisation of the tank fleet of the Indian Army, the proposal for procurement of Future Ready Combat Vehicles (FRCVs) has been cleared. The FRCV will be a futuristic Main Battle Tank with superior mobility, all-terrain ability, multilayered protections, precision and lethal fires over and real-time situational awareness, the release stated.
The AoN was also accorded for procurement of Air Defence Fire Control Radars, which will detect and track aerial targets and provide firing solutions. The proposal has also been approved for Forward Repair Team (Tracked) which has suitable cross-country mobility for carrying out in-situ repair during mechanised operations.