Looking into the capital expenditure (capex) for May 2025, a steep surge was noted, with defense spending becoming the prime mover, giving a huge impetus to Operation Sindoor. The Jefferies report informs that in May, the total defense expenditure witnessed a 328% year-on-year surge, showing the Centre's enhanced focus on military modernization and border infrastructure bone of contention amid disturbingly high geopolitical tensions.
Operation Sindoor is a multi-phased strategic defense deployment to improve India's surveillance, missile, and border readiness along the northern and northeastern frontiers. The exact details remain classified, but it is said to involve accelerated procurement of high-end artillery systems, drones, satellite-linked communications, and indigenous missile platforms.
The operation works towards accelerated upgrades of infrastructure, including forward airstrips and military roads along the LAC.
Jefferies notes that Operation Sindoor has not only catalyzed front-loaded defense allocations but also signaled a broader policy shift—prioritising indigenous defense manufacturing under the ‘Make in India’ banner.
Overall, central government capex grew 52% YoY in May, led primarily by defense.
Defense ministry alone contributed nearly 37% of total capex, versus 14% a year ago.
Key beneficiaries include Bharat Electronics, Hindustan Aeronautics Ltd, and Bharat Dynamics, all of which saw orders surge.
The Ministry of Road Transport and Railways also witnessed double-digit capex growth, but trailed far behind defense.
Jefferies emphasized that this pace of spending suggests the government is front-loading expenditure ahead of the monsoon and possibly in anticipation of upcoming state elections later in the year.
The analysts are of the view that enhanced defense capex would serve two purposes: increased national security on account of the continuing border stand-offs and economic acceleration through industrial activity and job creation.
It is in this regard that over 68% of contracts have been tendered to Indian companies in the recent past, causing a ripple effect in allied industries like electronics, metal, logistics, and construction. Jefferies holds a view that if such momentum continues, defense capex could touch an all-time high mark in FY26 at over ₹2.5 lakh crore.
Operation Sindoor has turned out to be a game-changing initiative for India's defense and economic landscape. With May 2025 capex reflecting aggressive military investment, the message is loud and clear, India is quickly working towards strategic deterrence, industrial self-reliance, or both