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India Signs INR4666 Crore Defence Contracts Boosting Domestic Industry

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  //business-finance.news-articles.net/content/202 .. efence-contracts-boosting-domestic-industry.html
  Published in Business and Finance on Tuesday, December 30th 2025 at 7:32 GMT by Zee Business

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Indian Defence Sector Buzzes: Mod Signs Contracts Worth Rs 4666 Crore, Bharat Forge Plays Key Role

The Indian Ministry of Defence (MoD) recently finalized contracts totaling ₹4666 crore (approximately $570 million USD), marking a significant boost for the domestic defence industry and furthering Prime Minister Narendra Modi’s “Atmanirbhar Bharat” (Self-Reliant India) initiative. The contracts, signed on November 21st, 2023, involve the procurement of critical equipment for the Indian Army and Navy, with prominent contributions from companies like Bharat Forge, BEL (Bharat Electronics Limited), and L&T (Larsen & Toubro). The deals underscore a continued shift towards indigenous manufacturing and reduced reliance on foreign defence suppliers.

Key Contracts and Their Significance:

The bulk of the contracts revolves around the procurement of advanced ammunition and crucial components for military vehicles. Let's break down the major elements:

• Bharat Forge’s ₹3200 Crore Ammunition Contract: This is arguably the most substantial portion of the overall deal, representing approximately 68% of the total value. Bharat Forge, a leading Indian manufacturer of automotive and defence components, will supply high-explosive artillery shells for the Indian Army. These are reportedly 155mm High Explosive (HE) rounds, vital for battlefield firepower. The contract is expected to be fulfilled over several years, providing a steady stream of revenue for Bharat Forge and creating employment opportunities within the company's manufacturing facilities. This order validates Bharat Forge’s growing presence in the defence sector and its ability to meet stringent quality standards required by the military. Bharat Forge has been steadily expanding its defence capabilities, focusing on both direct supply and acting as a key supplier to other prime contractors (more on that later).

• BEL's ₹783 Crore Contract for Naval Communication Systems: Bharat Electronics Limited (BEL), a state-owned electronics giant, secured a contract worth ₹783 crore. This deal involves the supply of integrated communication systems for Indian Navy ships. These systems are crucial for secure and reliable communication between vessels, shore bases, and other military assets. BEL's expertise in electronic warfare and communications technology makes it well-suited to fulfill this requirement. The contract reinforces BEL’s position as a vital supplier to the Indian armed forces and contributes to enhancing India’s naval capabilities. BEL has been actively involved in defence electronics for decades, consistently adapting to evolving technological needs.

• L&T's ₹683 Crore Contract for Tank Components: Larsen & Toubro (L&T), another major Indian engineering conglomerate, received a contract worth ₹683 crore. L&T will manufacture critical components for the T-72 Arjun main battle tanks used by the Indian Army. While specific details about the components haven't been publicly released, they are likely to be related to the tank’s propulsion system, fire control mechanisms, or other essential sub-systems. This contract highlights L&T’s diversified capabilities and its commitment to supporting India’s defence modernization program.

The "Atmanirbhar Bharat" Push & Supply Chain Dynamics:

These contracts are a direct manifestation of the “Atmanirbhar Bharat” initiative launched by Prime Minister Modi in 2020. The initiative aims to reduce dependence on foreign arms suppliers and promote self-sufficiency in defence production. While these contracts involve Indian companies, it's important to understand the complex supply chain dynamics at play.

Bharat Forge’s role is particularly illustrative of this complexity. While Bharat Forge will be directly supplying ammunition, they also act as a Tier-1 supplier for other prime contractors like Larsen & Toubro and potentially others involved in larger defence projects. This means that while Bharat Forge receives a significant portion of the contract value, it will, in turn, source components and sub-assemblies from various other Indian and international vendors. This tiered system is common in large defence contracts, allowing for specialized expertise to be leveraged across different companies.

The MoD’s emphasis on indigenous content (IDC) within these contracts is also a key factor. The government has been progressively increasing the minimum IDC requirement for defence procurement, pushing suppliers to incorporate locally manufactured components and technologies. This incentivizes Indian companies to invest in research and development and build up their manufacturing capabilities. While the Zeebiz article doesn't specify the exact IDC percentage for these particular contracts, it’s safe to assume that a significant portion of the value will be derived from domestically produced goods and services.

Impact on the Defence Sector & Future Outlook:

The signing of these contracts has generated considerable excitement within the Indian defence sector. It provides much-needed visibility and order book certainty for companies like Bharat Forge, BEL, and L&T, allowing them to plan their investments and expansion strategies more effectively. Furthermore, it sends a strong signal to other potential suppliers that India is committed to supporting domestic defence manufacturing.

Looking ahead, the Indian government is expected to announce further defence contracts in the coming months, focusing on areas such as naval shipbuilding, air force modernization, and advanced missile systems. The continued emphasis on “Atmanirbhar Bharat” suggests that these future contracts will also prioritize indigenous content and encourage greater participation from Indian companies. The success of these initiatives hinges not only on securing orders but also on ensuring the quality, reliability, and timely delivery of defence equipment – a challenge that requires close collaboration between government agencies, prime contractors, and their supply chain partners.

Disclaimer: This article is based solely on information available in the Zeebiz.com article linked above and publicly accessible sources related to the companies mentioned.