Capital Goods Sector Update : DDP notifies 6th Positive Indigenisation List by Prabhudas Lilladher Capital
Quick Pointers
* DDP, Ministry of Defence has notified the sixth Positive Indigenisation List (PIL) comprising 405 strategically important items
* ~5,400 items have been notified since the 1st PIL List was published by DDP in December 2021
The Department of Defence Production (DDP), Ministry of Defence, has notified the sixth Positive Indigenisation List (PIL) comprising 405 strategically important items across key defence platforms. We believe the broader scope of the latest PIL is aligned with the government’s Atmanirbhar Bharat initiative and should strengthen the domestic defence manufacturing ecosystem by driving capacity creation, increasing MSME participation across the supply chain and reducing import dependence. The initiative builds on the Defence Acquisition Procedure (DAP) 2020 and Defence Procurement Manual (DPM) 2025, while complementing the Draft DAP 2026, which proposes indigenous content requirements of up to 60%.
Details of 6th Positive Indigenisation List
This include 16 items of the Indian Coast Guard (ICG) and 389 items of Defence Public Sector Undertakings (DPSUs). The indigenisation is expected to generate business worth~Rs31bn with previous PILs spurring domestic procurement from DPSUs with Rs100bn; creating an import substitution value of ~Rs90bn.
The items cover a broad range of defence platforms and systems, including:
* Air platforms such as Advanced Light Helicopter, Light Utility Helicopter, Su30MKI, Light Combat Aircraft and AL-31FP Engine
* Armoured platforms including T-72, T-90 and BMP-II
* Warships
* Missile systems such as Konkurs-M, Invar and MRSAM
* Defence electronics including radars, sonars, fire control systems and satellite communication systems
* High Explosive Anti-Tank ammunition and other critical defence equipment
The SRIJAN Defence Portal, launched in August 2020, serves as a platform connecting DPSUs and Service Headquarters with domestic industry to promote indigenous development and manufacturing of defence equipment. As of June 2026, over 33,000 items have been identified and offered for indigenisation through the portal, expanding opportunities for MSMEs, start-ups and other Indian defence manufacturers.
Our View
BEL and HAL have the highest share of items notified for indigenisation, with both companies already undertaking initiatives to deepen domestic sourcing. BEL has consistently invested in R&D, strengthened its vendor ecosystem through partnerships with MSMEs and established a dedicated Indigenisation Cell to support its Atmanirbhar Bharat objectives. HAL, meanwhile, has established a dedicated indigenisation fund by allocating 3% of annual PAT and is pursuing indigenous development through its Make-II framework, supporting greater localisation across its platforms and supply chain.
Positive Indigenisation Lists are structurally positive for Indian defence companies as they create a domestic demand pool by mandating local sourcing of identified defence equipment and components. This should accelerate import substitution, and technology development, while increasing opportunities for private players and MSMEs across platforms, subsystems and critical components
We remain positive on long-term growth story of BEL given
1) strong order backlog of INR722.6bn (2.6x TTM Revenue) provide multi-year revenue visibility
2) healthy pipeline comprising QRSAM, NGC Systems, MFRX radars, P75I submarine programs and many others
3) diversification in non-defence verticals like data centres, cyber-security, drones and quantum communication to aid non-defence growth
4) government focus on product indigenization and import substitution, supporting long-term growth visibility.
Please refer disclaimer at Report
SEBI Registration number is INH000000933
