Hindustan Aeronautics Limited (HAL) has emerged as the largest contributor to a ₹3,951 crore dividend payout by seven Indian defence public sector undertakings (DPSUs), highlighting the growing financial and industrial role of state-owned companies in India’s push for greater defence self-reliance and global competitiveness.
HAL presented a ₹2,155.96 crore dividend cheque to India’s Defence Minister Rajnath Singh for the government’s equity holding for financial year 2025-26. The payment was made during the annual performance review of India’s 16 DPSUs in New Delhi on September 1.
The seven DPSUs presenting dividends were HAL, Mazagon Dock Shipbuilders (MDL), Bharat Electronics (BEL), Bharat Dynamics (BDL), Garden Reach Shipbuilders and Engineers (GRSE), BEML and MIDHANI. Together, they contributed ₹3,951 crore to the government through dividends on its equity holdings.
HAL accounts for more than half of the payout
HAL’s ₹2,155.96 crore contribution was by far the largest among the seven companies, accounting for more than half of the total dividend amount. BEL followed with ₹934.48 crore, while MDL contributed ₹593.64 crore. BDL presented ₹123.59 crore, GRSE ₹110.09 crore, BEML ₹21.60 crore and MIDHANI ₹11.78 crore.
For HAL, the dividend comes at a time when the company is positioned at the centre of India’s effort to expand indigenous aerospace manufacturing. The company is involved across military aircraft, helicopters, engines, avionics, upgrades and maintenance activities, making its performance strategically important to India’s defence industrial base.
DPSU growth reflects expanding defence manufacturing base
The dividend payout forms part of a broader improvement in the performance of India’s DPSUs. According to India’s Ministry of Defence, the 16 DPSUs recorded combined turnover of ₹1.29 lakh crore ($15 billion-plus) in FY2025-26, representing a 15.4% increase from the previous financial year. Their cumulative profit after tax reached ₹23,136 crore, up 15.6%. Defence PSU exports also increased by 151.2% during the year.
India’s overall defence production reached approximately ₹1.8 lakh crore during FY2025-26, with DPSUs accounting for around ₹1.29 lakh crore of that output.
The figures point to a gradual shift in India’s defence manufacturing landscape, with government-owned companies increasingly being expected to operate not only as suppliers to the Indian armed forces but also as commercially sustainable and export-oriented enterprises.
From import substitution to technology ownership
India has historically relied heavily on overseas suppliers for several major defence platforms, technologies and components. The government is now seeking to increase the domestic share of the value chain, including design, engineering, manufacturing, repair, upgrades and lifecycle support.
At the DPSU review, Singh called for lower import dependence, faster delivery, stronger R&D, higher exports, greater productivity and increased support for start-ups and MSMEs.
He also stressed that R&D performance should not be measured simply by expenditure, but by the technologies, intellectual property, prototypes and operational products that result from the investment. This is particularly relevant to aerospace, where control over critical technologies can determine both operational availability and long-term supply-chain resilience.
HAL’s modernisation and indigenisation
The government released two separate roadmaps for HAL during the review, a Modernisation Roadmap aimed at making the company a future-ready aerospace enterprise and an Indigenisation Roadmap focused on increasing self-reliance across the aerospace and defence sector.
For HAL, this represents an important transition from its traditional role as a state-owned aircraft manufacturer and MRO provider towards becoming a broader aerospace enterprise with stronger indigenous technology and manufacturing capabilities.
The focus on indigenisation also has implications for India’s wider aerospace supply chain. Increasing the domestic content of aircraft and defence systems could create opportunities for Indian suppliers across components, structures, avionics, electronics, materials, machining, special processes and maintenance support.
Supply-Chain resilience a defence priority
The push for self-reliance is also being shaped by lessons from recent conflicts. Global defence supply chains have faced increasing pressure from geopolitical tensions, production constraints and shortages of critical components. For military operators, the ability to secure spares, repair damaged platforms and maintain production during a prolonged crisis has become a strategic capability.
Singh described the progress of DPSUs as not only an economic or industrial requirement but a national security imperative, pointing to the importance of assured supply chains, surge capacity, critical spares and rapid repair capabilities.
For India, developing these capabilities domestically could reduce exposure to external supply disruptions while improving the availability and sustainment of its military fleet.
Make in India, make for the world
The next challenge for India’s DPSUs will be to convert domestic scale into international competitiveness. Singh urged the companies to pursue the objective of “Make in India, Make for the World”, calling for DPSUs to evolve into global players.
That ambition will require more than higher production volumes. Indian defence manufacturers will need to compete internationally on technology, reliability, quality, delivery performance, cost and lifecycle support. For aerospace companies, this could also mean expanding beyond aircraft and equipment sales into global aftermarket opportunities, including MRO, component support, upgrades and long-term fleet sustainment.
India’s sharp increase in defence exports during FY2025-26 suggests that the export side of this strategy is already gaining momentum.
Broader aerospace ecosystem
The government is also looking to strengthen the connection between DPSUs and the wider industrial ecosystem. Greater participation by private companies, MSMEs and start-ups could help bring specialised technologies and faster innovation into large defence programmes. DPSUs, in turn, can provide scale, infrastructure and access to major military programmes.
For India’s aerospace sector, this could help develop a deeper domestic supply chain rather than concentrating manufacturing capability within a small number of large organisations.
The long-term opportunity is to build an ecosystem in which Indian companies can participate at multiple levels, from design and engineering to component manufacturing, final assembly, MRO and lifecycle support.
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A test for India’s Defence Industry
The ₹3,951 crore dividend payout is therefore more than a financial milestone for India’s defence PSUs. HAL’s ₹2,155.96 crore contribution, in particular, reflects the scale and importance of the country’s leading state-owned aerospace company.
But the larger test for India will be whether strong financial performance can be translated into deeper technological capability and sustainable global competitiveness.
Higher domestic production, stronger R&D, indigenous technologies, resilient supply chains and growing exports will ultimately determine whether India can move from being a major defence equipment buyer to becoming a significant global aerospace and defence manufacturing hub.
For HAL, the combination of its dominant dividend contribution, modernisation plans and indigenisation roadmap places the company at the centre of that transition from building for India to increasingly competing for the world.
