DAM Capital has initiated coverage on India's defence sector, expressing a bullish outlook for its long-term growth. The firm anticipates that the sector will transition from being import-dependent to self-reliant and export-focused, supported by strong policy initiatives and substantial budget allocations. The government aims for ₹3 trillion in defence production and ₹50,000 crore in exports by the financial year 2029, creating a robust investment case for the sector. DAM Capital has identified top investment picks, including Astra Microwave Products with a target price of ₹1,300 and Hindustan Aeronautics at ₹6,300. The defence budget has shown consistent growth, compounding at 8.5% CAGR since FY2020, with a notable 22% increase to ₹2.2 trillion in the FY2027 estimates. Furthermore, the shift towards domestic procurement is evident, with 75% of the FY2027 budget earmarked for local sourcing, reflecting a decisive move towards indigenisation. The surge in defence exports, which rose to ₹38,420 crore in FY2026 from just ₹690 crore in FY2014, underscores the sector's potential, with the government targeting ₹50,000 crore in exports by FY2029.