Market veteran Gurmeet Chadha has identified defence as the defining theme of the current decade, a perspective that gains particular relevance amid ongoing global geopolitical tensions and crises like the situation in Venezuela. The Managing Partner & CIO at Complete Circle argues that true national strength lies not in oil reserves, natural resources, or export competitiveness, but in military power and advanced defence capabilities that protect sovereignty and business interests.

Global Context Reinforces Defence Priority

The Venezuela crisis serves as a compelling example of how economic resources alone cannot guarantee stability. Despite possessing some of the world's largest proven oil reserves, Venezuela continues to face political instability, sanctions, and external pressures. According to Bloomberg, analysts indicate it could take years for critical infrastructure repairs and for oil to flow freely from Venezuela, which currently accounts for less than 1.00% of global supplies despite having the world's largest reserves.

India's Strategic Defence Investments

India's defence modernisation efforts align with this global reality. The Ministry of Defence has recently signed contracts worth ₹4,666.00 crore to strengthen operational readiness across the armed forces. These strategic investments demonstrate the government's commitment to enhancing military capabilities in an increasingly complex security environment.

Major Procurement Initiatives

The largest component involves procuring over 4.25 lakh Close Quarter Battle Carbines along with accessories, valued at ₹2,770.00 crore. Bharat Forge Ltd and PLR Systems Pvt. will supply these firearms for induction into both the Indian Army and Indian Navy. This procurement forms part of the government's broader infantry equipment modernisation program aimed at enhancing battlefield effectiveness.

Additionally, the ministry signed a contract worth approximately ₹1,896.00 crore for 48 Heavy Weight Torpedoes intended for the Indian Navy's Kalvari Class submarines under Project 75. WASS Submarine Systems S.R.L. of Italy will supply these advanced torpedoes, with deliveries scheduled from April 2028 through early 2030.

Aggressive Capital Expenditure Framework

These developments occur within a broader capital expenditure push by the Ministry of Defence. For fiscal 2026, the ministry has already signed capital contracts totaling ₹1,82,492.00 crore aimed at comprehensive armed forces modernisation. The momentum continues with India's Defence Acquisition Council approving an additional spending outlay of ₹79,000.00 crore.

The strategic focus on defence capabilities reflects recognition that military preparedness and advanced weapon systems are essential for protecting national interests in an era where power equations are increasingly shaped by defence preparedness and strategic deterrence capabilities.

Bharat Forge Ltd. management is expressing strong confidence about the company's prospects for 2026 following the successful securing of its largest small arms contract to date. The optimism comes as the company anticipates significant growth from domestic defence wins and infrastructure development across India.

Record Defence Contract Win

The company has secured a substantial contract worth ₹1,661.9 crore from the Ministry of Defence to supply 255,128 Close Quarter Battle (CQB) Carbines over a five-year period. This represents the largest small arms contract in the company's history and demonstrates the growing confidence in indigenous defence manufacturing capabilities.

Joint Managing Director Amit Kalyani emphasized the indigenous nature of these products, stating that the CQB carbines and ATAGS artillery guns developed with DRDO are "deeply and fundamentally Indian products, Indian designed, developed and manufactured with complete Indian IP." He believes this factor should provide significant confidence to the armed forces.

Strong Defence Order Book Position

The recent contract win has strengthened Bharat Forge's defence portfolio significantly. The company's defence order book now stands at approximately ₹11,000 crore, positioning it well for sustained growth in the coming years. Kalyani expects naval systems and unmanned platforms to emerge as the next growth frontiers for the company.

"India is dramatically increasing its shipbuilding capacity," Kalyani noted, highlighting this as an area where the company sees significant opportunities for expansion.

Strategic Business Restructuring

Regarding the transfer of the defence business to a wholly-owned subsidiary, Kalyani clarified that the move was designed to improve operational focus rather than immediate capital raising. He explained that the defence business requires different operational approaches, stating, "This business has a different cadence, it has different DNA. We need to give it that kind of scaffolding and support."

Diversified Growth Strategy

Despite headwinds in the North American truck market affecting the company's standalone revenue in the second quarter, Kalyani downplayed the segment's impact on the broader group. He noted that the US truck market represents approximately a double-digit percentage of total revenue, reducing its overall influence on company performance.

Instead, the company is focusing on India's domestic manufacturing push spanning multiple infrastructure sectors:

• Airport development projects
• Port infrastructure expansion
• Railway modernization initiatives

Kalyani compared India's infrastructure growth potential to China's development trajectory, indicating substantial opportunities ahead. The management expects this domestic infrastructure boom, combined with the maturing defence portfolio, to drive qualitatively better performance in 2026 compared to 2025.