Exporting Self-Reliance: The Policy Architecture Behind India’s Defence Growth

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Defence exports have become a vital component of the ‘Atmanirbharta’ initiative in India’s defence sector. India has been exporting defence products to its allies and non-hostile countries alike. Since 2014, the Modi government has undertaken policy efforts to enhance domestic defence manufacturing alongside integrating it with ambitious targets for defence exports. Owing to structural reforms, India’s defence exports have witnessed significant numerical growth, resulting in a 34-fold increase over the last decade. This signals a clear departure from the past. The current surge in defence exports warrants an assessment of how India has streamlined its export processes—and how it can further enhance them both qualitatively and quantitatively.

Owing to structural reforms, India’s defence exports have witnessed significant numerical growth, resulting in a 34-fold increase over the last decade.

Explaining the Surge in Export Growth

Since 2014, defence production and strengthening the industrial base have remained key agenda items for the national security policy of the Modi government. Defence exports have increased from INR 686 crores in 2013–14 to INR 23,622 crores in 2024–25.

The Atmanirbhar Bharat initiative was launched in 2020—during the Modi government’s second tenure—and became a significant step against the backdrop of the stand-off between the Indian Army (IA) and the Chinese People’s Liberation Army (PLA) along the India-China border. The crisis catalysed the need for defence preparedness and self-reliance in production, offering a new boost to India’s Defence Industrial Base (DIB). The government’s emphasis on domestic production and procurement through indigenous sources helped both private companies and Defence Public Sector Units (DPSUs) to expand capacities and deliver export orders.

Table: A comparison of capital procurement from domestic and foreign capital sources

Source: Standing Committee on Defence 2024-25

As part of broader defence sector reforms, the government introduced the Defence Production and Export Promotion Policy (DPEPP) 2020 alongside the Defence Acquisition Procedure (DAP) 2020, aiming to strengthen the ecosystem for defence exports. The exponential growth in defence exports can be attributed to four key factors: indigenisation of the defence sector with the participation of private industry and five indigenisation lists; corporatisation of Ordnance Factories Board (OFBs) and continuous political direction and guidance to oversee self-reliance in the defence sector.

Table: Key policy measures by the government to facilitate defence exports

Source: Authors’ compilation using various sources

Furthermore, another major reform constitutes the corporatisation of the OFBs. The policy aims to reorient the DPSUs by targeting key goals such as enhancing autonomy, efficiency, flexibility, and better utilisation of their existing capacities in the domestic sphere to generate tangible outcomes.

Beyond The Numbers Game: Measuring the Effectiveness of DIB

The growth and effectiveness of the DIB can be assessed through various indicators, including the monetary value of defence exports, the quality of defence products, and the quantity and scale of exported items. In addition, innovation forms the bedrock of the industry. These factors contribute to determining the success and level of competitiveness of the defence industry. The volume and scale of exports by the private sector and public DPSUs also indicate the efficacy of structural reforms and existing challenges towards a robust DIB.

Table: India’s Defence Exports (values in INR crores)

Source: Department of Defence Production Dashboard

In 2024–25, Defence Public Sector Undertakings (DPSUs) accounted for 78 percent of the total defence production value of INR 1.4 lakh crore. Since the corporatisation of the OFBs in 2021, DPSUs have witnessed an exponential rise in export figures.. Between 2020–21 and 2024–25, defence exports from the DPSUs have increased over nine times, marking an annual increase of 42.85 percent in 2024–25 compared to 2023–24. Private sector companies and DPSUs have contributed INR 15,233 crore and INR 8,389 crore, respectively, in defence exports for the Financial Year (FY) 2024–25. In FY 2023-24, defence exports were worth INR 15,209 crore and INR 5,874 crore respectively. A comparative assessment reveals exports running in favour of private sector enterprises dedicated to defence since they prove to be more competitive than DPSUs. The industry’s overall aim during the past decade has been successful in generating a better revenue base.

A comparative assessment reveals exports running in favour of private sector enterprises dedicated to defence since they prove to be more competitive than DPSUs.

In terms of exports, India has diversified its defence-related consumer base. Among major DPSUs—Bharat Electronics Limited (BEL) alone exports to 51 countries. In addition to conventional subsystems and components, India’s DPSUs are advancing with the export of major systems, including Dornier-228 aircraft, BrahMos missiles, Aakash SAM missiles, and Pinaka rocket launchers. In the private sector, major stakeholders such as Kalyani Strategic Systems Limited (KSSL) exported 100 artillery guns in 2024—including 18 Advanced Towed Artillery Guns (ATAGs)—to several countries, including European countries. In February 2025, KSSL also signed a letter of intent with the United States (US) AM General for the supply of artillery cannons. Bharat Forge, a leading Indian private defence firm, announced in its Annual Report 2024 that it secured revenue of INR 1,561 crore, with 90 percent derived from defence exports. Within the last decade, especially since the Atmanirbharta Mission in 2020, the private sector has created great potential to expand India’s defence export base in the future.

A Robust DIB For Defence Exports

New Delhi has set an ambitious target of defence exports worth INR 50,000 crores by 2029. India’s existing track record and success story in defence exports must be established through a competitive and organic defence industrial base in the long term. The existing DIB should be made resilient and adaptive to cater to three major changes: the geopolitical environment, technological innovation, and the changing character of warfare.

A resilient mechanism for Intellectual Property Rights (IPR) processes is required to secure innovations for scaling and export purposes.

The DPSUs demand a clear roadmap for the indigenisation of components, capabilities, and policy processes. The 2022–23 Parliamentary Standing Committee on Defence highlights a set of challenges for DPSUs, including untapped capacity, delayed delivery timelines, delayed or pending permissions for the export of missile systems from foreign Original Equipment Manufacturers (OEM), and delayed clearance from stakeholders in turnkey projects. The indigenisation cells within these DPSUs need acceleration to implement processes at each unit.  Additionally, a resilient mechanism for Intellectual Property Rights (IPR) processes is required to secure innovations for scaling and export purposes.

In conclusion, both the private sector defence companies and DPSUs must maintain momentum and evolve amidst structural cum organisational limitations. Although DPSUs have an edge over the private sector in domestic defence production, they lag in defence exports vis-à-vis the private sector. The differences in export performance and trends illustrate why the private sector outperforms DPSUs in achieving India’s ambitious defence export goals.

Kartik Bommakanti is a Senior Fellow with the Strategic Studies Programme at the Observer Research Foundation.

Rahul Rawat is a Research Assistant with the Strategic Studies Programme at the Observer Research Foundation

• Defence and Security
• Indian Defence
• China
• India
• atmanirbhar bharat initiative
• defence production and export promotion policy 2020
• india defence industrial base
• indian defence exports
• indian defence exports 2025
• indian defence sector
• make in india
• make in india defence

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