The recent military clashes between India and Pakistan have brought renewed focus on India's defense sector, potentially boosting its defense business and accelerating the government's push to increase arms exports. India has set an ambitious target of ₹50,000 crore (US$5.9 billion) in defense exports by 2029-30, and even more ambitious target of ₹3 lakh crore as export in the defence sector by 2029.
Increased Defense Spending and Production
In response to the escalating tensions and cross-border conflicts, India's defense budget for 2024-25 reached $86.1 billion, marking a 1.6% increase. This investment reflects India's commitment to military modernization and self-sufficiency through indigenous production. The government's efforts have yielded impressive results, with defense production reaching ₹1.27 lakh crore in FY 2023-24, the highest-ever rise and a more than 60% increase since FY 2019-20.
Surge in Defense Exports
India's defense exports have experienced a remarkable surge, reaching a record high of ₹23,622 crore (US$2.8 billion) in FY 2024-25, a 12.04% increase. This figure represents a 34-fold rise since FY 2013-14, demonstrating the success of the "Make in India" initiative. The government is actively promoting defense exports to approximately 80 countries, aiming to achieve ₹50,000 crore in exports by 2029.
The private sector and Defense Public Sector Undertakings (DPSUs) have played significant roles in this export growth. In FY 2024-25, the private sector contributed ₹15,233 crore, while DPSUs generated ₹8,389 crore in exports. The DPSUs have shown substantial improvement with a 42.85% increase in exports, indicating growing international confidence in Indian defense products.
Key Export Items and Destinations
India's export portfolio includes a diverse range of military equipment, including:
The United States, France, and Armenia have emerged as key buyers of Indian defense products, highlighting India's growing reputation as a reliable defense partner.
Government Initiatives and Policy Changes
The Indian government has implemented several policy changes to strengthen the defense sector and promote exports, including:
These initiatives have led to a significant increase in export authorizations, with 1,762 issued in FY 2024-25, a 16.92% rise from the previous year. The number of defense exporters has also increased by 17.4%, indicating greater participation of Indian firms in the global defense supply chain.
Strategic Implications
India is using arms exports as a strategic tool to enhance its diplomatic influence, strengthen regional partnerships, and assert itself as a rising global power. The government has linked defense manufacturing with foreign policy to build national capacity and counter rivals like China and Pakistan. By promoting indigenous defense production and exports, India aims to reduce its dependence on imports and enhance its prestige and capabilities.
Challenges and Opportunities
Despite the impressive growth in defense exports, India still faces challenges. The country domestically produces only 70% to 75% of its defense products, with the rest being imported. To achieve its ambitious export targets, India needs to further enhance its manufacturing capabilities, improve the competitiveness of its products, and strengthen its partnerships with other countries.
However, the increasing global demand for defense equipment presents a significant opportunity for India. NATO's plan to increase defense spending and the limited manufacturing capacity in Europe create a favorable environment for Indian companies to secure more export deals. With its cost-effectiveness, capacity, and growing credibility, India is well-positioned to capitalize on these opportunities and become a major player in the global defense market.
