Counter-drone, AI warfare take centre stage as DAC clears ₹52,000 crore defence push

The Defence Acquisition Council's (DAC) on Friday approved capital acquisition proposals worth about ₹52,000 crore. While the figure may appear modest compared with some of the record-breaking procurement packages cleared over the past year, a closer look at what India plans to buy suggests the announcement marks a major shift in military modernisation—from conventional platforms to battlefield technologies centred on drones, electronic warfare and surveillance.

The DAC, chaired by Defence Minister Rajnath Singh, on Friday accorded Acceptance of Necessity (AoN) for a range of acquisitions including the Akash Tarang anti-unmanned aerial vehicle (UAV) electronic warfare system, man-portable anti-tank guided missiles (MPATGM), Medium Range Surface-to-Air Missile (MRSAM) systems, Very Short Range Air Defence Systems (V-SHORADS), active protection systems for tanks, jet-based kamikaze drones, naval unmanned aerial systems and a Fixed-Wing High Altitude Pseudo Satellite (FW-HAPS) for the Indian Air Force.

Technology, not tonnage

While the ₹52,000 crore package accounts for just about 6.6% of the Union government's ₹7.85 lakh crore defence allocation for FY27, it represents nearly 24% of this year's ₹2.19 lakh crore capital outlay and roughly 28% of the ₹1.85 lakh crore earmarked specifically for capital acquisitions, stressing its importance in the military's modernisation pipeline.

Unlike previous mega approvals dominated by fighter aircraft, helicopters or warships, the latest package is heavily weighted towards anti-drone systems, electronic warfare, surveillance and autonomous platforms—areas that defence analysts and brokerages have increasingly identified as the next phase of India's military capability build-up.

According to brokerage assessments, the latest approvals reinforce a structural shift towards technology-intensive warfare rather than platform-centric acquisitions.

Brokerages saw this coming

A recent defence conference note by PL Capital said India's defence ecosystem has entered a "multi-year structural growth phase" driven by indigenisation, deep-tech innovation and rising exports, with drones, counter-drone technologies, electronic warfare, AI-enabled systems and mission-critical electronics emerging as the biggest opportunities. The report added that learnings from Operation Sindoor had accelerated procurement priorities for indigenous drones, counter-drone systems and autonomous technologies.

Similarly, DAM Capital, in its 210-page initiation report on the defence sector, argued that India's defence industry is transitioning from platform manufacturing to technology-intensive systems, with electronics, radars, electronic warfare, seekers, sensors, missiles and software becoming key value drivers. The brokerage estimates a nearly ₹15 lakh crore defence opportunity through FY31, supported by rising capital expenditure, localisation and exports.

The latest DAC approvals appear to validate that thesis almost item-for-item.

Who stands to gain?

Among listed companies, Bharat Electronics (BEL) is widely seen as one of the biggest potential beneficiaries given its leadership in electronic warfare, radar, communication systems and air defence integration.

Bharat Dynamics could benefit from missile-related programmes including MPATGM, MRSAM and V-SHORADS, while Astra Microwave's expertise in radar, radio frequency and electronic warfare systems places it in a favourable position for anti-drone and surveillance programmes, analysts said. Companies operating in defence electronics, mission systems, sensors and loitering munitions are also expected to remain in focus as procurement gathers pace.

Unlike earlier procurement cycles where value creation was concentrated among platform manufacturers, the latest approvals indicate growing opportunities for subsystem suppliers specialising in software, AI, electronic warfare, guidance systems and advanced sensors.

A broader procurement shift

Today's announcement also fits into the government's broader post-Operation Sindoor modernisation strategy. The FY27 defence budget raised capital expenditure by nearly 22% to ₹2.19 lakh crore, while around 75% of the capital acquisition budget has been reserved for domestic industry as part of the government's Aatmanirbhar Bharat push.

Although the latest ₹52,000 crore package is smaller than the record ₹2.38 lakh crore AoN approved by the DAC in March this year, its composition suggests India's procurement priorities are evolving rapidly.

Instead of simply buying more platforms, the armed forces are increasingly investing in technologies that enable persistent surveillance, electronic warfare, layered air defence and autonomous operations—capabilities that have emerged as defining features of modern conflict. For India's defence industry, that could prove to be the bigger story than the headline number itself.

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