Why 117 Rafales Could Fire Up India’s Defence Sector Stocks: Goldman Sachs Weighs In

India’s defence sector stocks could see sustained investor interest after the Defence Acquisition Council (DAC) cleared a proposal to procure 114 Rafale fighter jets, a move that could materially expand domestic manufacturing, maintenance, and aerospace supply-chain opportunities, according to insights from an expert call hosted by Goldman Sachs.

The proposed Rafale programme is being viewed by markets as more than a fighter aircraft purchase, with policymakers and analysts pointing to its long-term implications for localisation, recurring revenues, and India’s positioning in the global defence ecosystems.

First Rafales To Be Manufactured Outside France

Addressing the strategic significance of the decision, Rajesh Kumar Singh, Secretary, Ministry of Defence, said the programme marks a major shift in India’s defence manufacturing roadmap. “For the first time, Rafale aircraft will be manufactured outside France with significant levels of localisation. We are seeking a minimum of 40 to 50% localisation. This is the first time ‘Make in India’ Rafale outside France, backed by a government-to-government agreement, with no intermediaries and full transparency in the project itself,” Singh said.

He added that the programme will also provide India with full operational flexibility. “Significant levels of localisation and full authority to integrate Indian weapons and Indian systems are the highlights of this programme. It also enables us to induct fighter aircraft relatively quickly because the first of the Rafale Marines will start coming in 2028, and after that, over a period of time, about three-and-a-half years from now, the first of these Air Force Rafales will also start coming,” he said.

For equity markets, this timeline and localisation commitment are critical, as they imply steady, multi-year order inflows rather than a one-time procurement spike.

India Could Become The World’s Largest Rafale Operator

If the full order for 114 aircraft is executed, India’s Rafale fleet would expand to over 175 jets, including the 36 aircraft already inducted, making India the largest Rafale operator globally.

According to the Goldman Sachs expert call, this fleet scale significantly strengthens the case for India emerging as a regional maintenance, repair, and overhaul (MRO) hub. In addition, 80 Rafale F4 aircraft ordered by the UAE could potentially be serviced in India, expanding the MRO universe to more than 250 aircraft over time.

This opens up long-duration revenue streams across spares, upgrades, avionics, electronics, and engine servicing, segments that typically deliver higher margins and predictable cash flows.

Structural Opportunity, Not A One-off Trade

Speaking during the call, Ashish Saraf, Vice President and Country Head, India at Pratt & Whitney, said the Rafale programme could fundamentally reshape India’s role in global aerospace supply chains. He highlighted that global OEMs are actively diversifying sourcing under the China+1 strategy and that India is increasingly being seen as a competitive manufacturing base. He also pointed out that RTX plans to increase sourcing from India by 10 times by CY30 compared with CY25, underscoring the scale of opportunity for Indian suppliers.

However, Saraf cautioned that full aero-engine indigenisation remains capital-intensive, with estimated costs of around $20 billion, suggesting that near-term gains will be driven more by component manufacturing, MRO, and systems integration rather than complete engine development.

Which Defence Stocks Stand To Benefit? 

The combination of large fleet size, localisation mandates, and MRO opportunities could benefit listed defence companies operating in high-entry-barrier segments. Market participants point to companies such as Bharat Electronics, Data Patterns, Azad Engineering, PTC Industries, and Solar Industries as potential long-term beneficiaries.

These firms are exposed to avionics, mission electronics, propulsion materials, and precision engineering, areas expected to see sustained order flow if localisation targets of 40–50% are executed.

From manufacturing and integration to MRO and upgrades, the programme could generate revenues over two to three decades, supporting valuation re-rating across defence stocks.

For investors, the 114–117 Rafale procurement is increasingly being seen as a structural defence theme, backed by policy clarity, global supply-chain shifts, and long-term visibility.

Also read: Why Elon Musk Criticized Anthropic After the AI Firm Raised $30 Billion