India’s defense exports reached an all-time high of USD $2.76 billion in FY 2024-25, recording 12 percent growth year-on-year. Today, Indian private and public sector defense companies collectively export defense products to 100 countries worldwide. This upward trajectory reflects the gradual expansion of the military-industrial complex in India—an important shift not just for accruing economic benefits or coping with growing uncertainties on its borders but for sealing India’s rise as a major power on the world stage. Growing defense capabilities can bestow greater geopolitical influence, potentially helping India counterbalance rival states and secure its rise. However, while New Delhi has successfully engineered a remarkable increase in defense exports, challenges remain for it to emerge as a leading global arms supplier.
India’s Policy Push
India has undertaken substantial reforms to achieve this progress in defense export volumes. On the one hand, the Indian government took steps to overhaul its national defense acquisitions process in order to encourage a flourishing domestic defense industrial ecosystem, focusing largely on the role of indigenization. For example, in 2020, the Ministry of Defence adopted an updated Defence Acquisition Procedure, which restricts certain types of weapons imports and prioritizes indigenous weapons instead as well as promotes increased indigenous content in defense projects. The goal of the policy is to nurture newer military manufacturers in India’s defense production space, leading to greater diversification, competition, and thus quality. To support defense startups and invest in domestic research and development (R&D), the Ministry of Defence has allocated over USD $56 million over five years under the Innovations for Defence Excellence (iDEX) program. In a similar vein, through initiatives such as Emergency Procurement, India has begun to bypass lengthy procurement processes and involve smaller, private defense companies to address urgent military requirements, developing the military industrial base and contributing to defense export potential.
Moreover, India has pursued specific policies with the aim of converting its growing defense industrial ecosystem into an international export powerhouse. In 2020, the Indian government institutionalized the Defence Production and Export Promotion Policy (DPEPP) to set targets and programs to manage India’s defense exports. The Ministry of External Affairs (MEA) is also working to increase visibility for India’s defense production. Indian embassies are actively promoting India’s domestic defense manufacturers and Defence Public Sector Undertakings (DPSUs) like Hindustan Aeronautics Limited are participating in promotional events like Defexpo, Aero India, Wings India, and others to attract foreign buyers. The Indian government has also introduced new financial incentives for potential buyers, offering attractive loans through its export-import bank.
Global Landscape of Indian Defence Exports
Since 2020, major military powers like the United States have become top buyers in India’s defense market. Indian manufacturers supply many small parts to defense firms in the United States, like fuselage, wings, and electronic and software support. India’s defense exports to the United States exceeded USD $2.8 billion between 2019 and 2024, representing a small proportion of U.S. arms imports but 50 percent of India’s total defense exports in the same period. The U.S.-India strategic semiconductor partnership represents another noteworthy development in bilateral defense ties—the U.S. Space Force, in collaboration with the Indian startup 3rdiTech, is set to manufacture semiconductors for national security applications in India, thereby facilitating technology transfers.
India’s defense exports to the United States exceeded USD $2.8 billion between 2019 and 2024, representing a small proportion of U.S. arms imports but 50 percent of India’s total defense exports in the same period.
As Europe rearms in the context of the Russia-Ukraine war and waning U.S. security commitments, India’s exports to the European Union have surged, surpassing USD $135 million from February 2022 through July 2024. India’s major private defense production houses have also made headway in the global market by inking a series of landmark production partnerships with European firms. These agreements see Indian companies like Reliance, Tata, Bharat Forge, and Mahindra working alongside European players like Dassault, Airbus, and Rheinmetall to establish manufacturing operations in India. Such deals have ranged from Reliance’s USD $68 million scheme to produce artillery shells and explosives with Rheinmetall to more ambitious projects supplying Airbus C295 transport planes or Dassault jet engines for fifth-generation fighter jets.
India’s budding defense export relationship with Armenia represents another critical recent development. Unlike the small parts trade or co-production partnerships that have defined engagement with major Western powers, Armenia has emerged as one of the first significant buyers of indigenously-developed finished products. In the past three years, Armenia has acquired the Pinaka multi-barrel rocket launch system, the Akash missile defense system, and an Indian anti-drone system.
Beyond Europe and the United States, India has continued its traditional focus on defense markets in Southeast Asia and Africa, where buyers tend to prioritize affordability over technological superiority. New Delhi began to build a defense relationship with Southeast Asian nations in the 1990s under the aegis of the “Look East” policy, but the pace has quickened in recent years. The first major breakthrough was the Philippines’ acquisition of the BrahMos missile, an Indo-Russian co-production, and the Southeast Asian nation appears set to purchase USD $200 million of Akash batteries this year. Similarly, Vietnam is reportedly close to finalizing a USD $700 million BrahMos deal, and India has already supplied Indonesia with 40mm naval gun systems.
Africa represents another important potential market for Indian defense exports. As of 2023, just 10 to 15 percent of India’s total defense exports went to African countries, but New Delhi has made concerted efforts to appeal to governments on the continent. Mauritius represents a successful model, having purchased Indian offshore patrol vessels and HAL-manufactured aircraft and helicopters, the latter using an Indian government line of credit.
Challenges to India’s Defense Export Ambitions
While the growth in Indian defense exports is impressive, it has still failed to hit the government target of USD $5 billion by FY 2024-25. Furthermore, India continues to lag behind even mid-size countries like South Korea (USD $9.5 billion) and Turkey (USD $7.1 billion) in terms of exports, indicating lackluster progress. India’s defense exports push depends on the indigenization of its defense industry, but progress to that end has also been inadequate. According to the Indian government, “65 percent of defense equipment is now manufactured domestically,” but foreign licensing, co-production arrangements, and component parts imports complicate the pursuit of full indigenization. Delays and deficiencies in quality have also hampered procurement from indigenous defense vendors. In an incident from earlier this year, the Indian Air Force chief publicly expressed apprehensions about the HAL-produced Tejas Mk1A aircraft. Financial difficulties have often hindered the export ambitions of India’s defense PSUs. Until 2024-25, for instance, DPSU Hindustan Shipyard Limited had been operating at a loss, which made it ineligible to participate in export tenders. To realize its defense export potential, India would have to reduce the risk of dependence on foreign components, tackle barriers to international export markets, pursue substantial and institutional innovations, and more proactively promote indigenous finished products.
To realize its defense export potential, India would have to reduce the risk of dependence on foreign components, tackle barriers to international export markets, pursue substantial and institutional innovations, and more proactively promote indigenous finished products.
Dependence on foreign Original Equipment Manufacturers (OEM) for raw materials and parts has sometimes made it difficult for Indian manufacturers to conform to delivery schedules. The delivery shortfall of PSUs like Bharat Dynamics Limited (BDL) is mainly due to delays and criticalities linked to foreign OEMs, including material non-receipts of smaller constituent parts like booster and sustainer propellants, component obsolescence, and supply issues. While it would be hard to abruptly lessen dependence on foreign OEMs, sound contracts can ameliorate these issues. PSUs like HAL have focused on detailed procurement guidelines regarding foreign OEMs, where they are required to ensure lifetime support under transfer of technology clauses, and must provide performance bank guarantees to ensure timely delivery and address obsolescence. However, in the long run, India would have to move beyond such mitigation strategies to remedy dependence on foreign OEMs through greater investment in domestic R&D, industry-university tie-ups, and a robust ecosystem of private sector manufacturers to encourage innovation.
India should also reckon with constraints that impede access to international defense export markets. The most important example is India’s absence from the U.S. Defense Federal Acquisition Regulation Supplement (DFARS) list. Despite the unavailability of certain special metals and alloys in the United States, without a DFARS listing, India faces challenges in exporting these small parts—potential exporters are forced to navigate complex regulatory structures or rely on exemptions. A Reciprocal Defense Procurement agreement, under which India and the United States would streamline procurement processes, remove barriers to each other’s defense services and supplies, and pave the way for New Delhi’s inclusion in the DFARS list. Although India signed a Security of Supply Arrangement (SOSA) with the United States in 2024, enabling priority delivery of certain urgent equipment requests, the RDP agreement would represent the final piece of the puzzle. Although PM Modi and President Trump called for RDP negotiations in February, the current downswing in ties complicates the pursuit of an agreement in the near future.
Institutional innovations will also be key to realizing India’s global defense export ambitions. Often, a lack of synergy between concerned institutions, like the Indian Armed Forces, public and private manufacturers, and the Ministry of Defence, regarding the correct approach to promote defense exports stymies broader efforts. India still lacks a single institution or a nodal agency to oversee defense exports. In addition to the inclusion of the MEA, India also needs to leverage the Planning and International Cooperation wing of the Minstry of Defence and defense attaches of the Indian Armed Forces at embassies abroad for a better demonstration of Indian weapons and military platforms. The Indian government has made some progress on this front through an export promotion scheme tasking defense attaches to champion defense equipment manufactured by DPSUs, but the existing sanctioned sum of just over USD $200,000 is inadequate. The Parliamentary Standing Committee on Defence (2022-23) has also recommended the creation of a separate wing solely for the promotion of exports and overseeing the quality, timely completion, and delivery by each of the DPSUs.
Lastly, the Indian military’s own confidence in indigenous weapons would represent the best sales pitch for Indian exports, especially finished products like the Akash Missile system, the AK-203 rifles, the Pinaka rocket launchers, and others. The increase in interest around indigenous systems like the Akash and the BrahMos following the May conflict with Pakistan exemplifies the importance of this confidence in attracting potential buyers amidst the competitive global export landscape. As such, the Indian services should be more involved in providing inputs for the development of indigenous systems, ensuring their service requirements are met and building domestic and international trust in the capabilities of Indian weapons. There are no easy solutions to the challenges facing India’s defense exporters, but a concerted push to address outstanding logistical, political, and institutional barriers will place India on the path to realizing its defense export ambitions.
Views expressed are the author’s own and do not necessarily reflect the positions of South Asian Voices, the Stimson Center, or our supporters.
Also Read: India’s 2024-2025 Defense Budget: Incremental Progress at Best
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Image 1: Anirvan Shukla via Wikimedia Commons
Image 2: Yeddulas via Wikimedia Commons
