Opposite to expectations, there were no significant announcements for the defence sector in the 2023-24 union budget. While the Ministry of Defence received the highest allocation among all ministries at Rs 5.94 lakh crore, it was not a significant increase from Rs 5.25 lakh crore in the current fiscal.

Shares of Bharat Electronics, Bharat Dynamics, Hindustan Aeronautics, Paras Defence and BEML fell 5-9% after Finance Minister Nirmala Sitharaman finished his budget speech.

Under its ambitious Atmanirbhar Bharat programme, the government has banned importing several items, including critical components used in defence equipment. That means they are now being made in India.

The government has set a target of Rs 1.75 lakh crore in defence production by 2025. As such, market participants hope for more significant initiatives to be announced in this budget.