Published on Dec 13, 2023

India is still a net importer, but its momentum is in the right direction.

A record boom

India’s defence export revenue touched a record high of Rupees 15,920 crore for FY23. This was more than 10 times New Delhi’s defence export revenue of Rupees 1,521 crore during 2016-17. What makes this export record even more astonishing is that, only a decade ago, India was exporting arms worth a marginal Rupees 686 crore.

Given this context, India’s quantum leap in defence export revenue is substantial and noteworthy. A range of policy, institutional, and technological factors has been responsible for this transition. Essential to the export upswing has been a change in the governmental approach—aiming to reduce the country’s massive import dependency, while pushing the agenda on exports.

Though the rise in defence exports is to be lauded, India still remains the world’s largest arms importer. Data from the Stockholm International Peace Research Institute (SIPRI) reveals that India accounted for more than 10% of global arms imports between 2012-17 and 2018-22. During 2012-17, India was the biggest arms importer in the world, accounting for 13% of the global tally. From 2018-22, New Delhi was again the biggest buyer, responsible for 11% of global defence imports.
Despite its recent trajectory, India still has far to go before emerging as a major arms exporter like the US, France, Russia, and Israel. New Delhi will take even longer to create external dependencies on its military-industrial complex like these dominant players. However—despite this gulf—India’s momentum is currently in the right direction.

India’s defence export revenue touched a record high of Rupees 15,920 crore for FY23. This was more than 10 times New Delhi’s defence export revenue of Rupees 1,521 crore during 2016-17.

Fundamental to India’s recent upward export trajectory has been the government’s philosophy to first build a robust domestic defence manufacturing framework and, through this, enhance exports in the long run. This forms a rational and logical approach—without an advanced and developed manufacturing capacity—there will be no inventory in terms of technological quality and quantity to export.

Pivotal to the implementation of this philosophy has been the Defence Production and Export Promotion Strategy (2020). The DPEP has set the tone and tenor for the government’s focus on its defence export agenda. Most significant has been the setting of definitive export targets and benchmarks for the country through the DPEP. Specifically, the government wants $5 billion in defence export revenue by 2025. The target is now the driving force for New Delhi’s export trajectory.
Beyond the DPEP, a slew of measures have also been introduced to augment the country’s domestic defence manufacturing capacity. Specifically, multiple positive indigenisation lists have been issued by the government, which mandate specific types of military equipment and spare parts and units to be purchased only from Indian manufacturers. This has been done to create greater market opportunities and incentives for domestic manufacturers. Further, a large proportion of the country’s defence capital procurement budget has been reserved for Indian industry.

While these two policies have been introduced to catalyse the capacity and scale of the domestic defence industry, the government has created liberalised licensing and certification norms to enable defence exports and prevent bureaucratic processes from stifling them.

Beyond these measures, there also seems to be the development of a whole-of-government approach towards promoting defence exports. The ministry of external affairs is assisting in promoting Indian defence platforms for exports through their embassies and missions abroad. The government is also providing defence credit lines to foreign countries to assist with sales.

The results of these measures are clearly visible in the export data from the past few years. Government data shows India’s defence exports totalled Rupees 1,910 crore in 2014-15. The revenue increased to Rupees 2,059.18 crore in 2015-16. The export curve then fell to Rupees 1,521 crore in terms of exports for the financial year 2016-17.
Next, the export graph rose to Rupees 4,682 crore in 2017-18 and then surged upwards to Rupees 10,745 crore in 2018-19. There was a Covid-19-induced dip in export value between 2019-20 and 2020-2021 at Rupees 9,115 crore and Rupees 8,434 crore respectively. Between 2020-21, export revenue increased to Rupees 12,814 crore.

While the exact breakup is unavailable, small parts and components form the largest chunk of New Delhi’s defence exports. Radars, thermal technology, and offshore patrol vessels are also part of New Delhi’s defence export portfolio. Another significant element of this export catalogue are bulletproof helmets and jackets. Recently, New Delhi also started exporting dual-use defence technologies. Avionics and fuselage are also part of the exports in the aviation space.

However, India’s defence export trajectory still faces an uphill task in meeting the $5 billion export revenue target for 2025. To achieve this, New Delhi will need to nearly double the current revenue in a year. While this may not be feasible immediately, it will be possible within the next few years. For this, specific challenges need to be dealt with.

First, there is a need for more cohesion between the ministry of defence, the armed forces, private manufacturers, and the DPSUs for the promotion and export of indigenous defence products. Specifically, a roadmap to cohesively promote and sell earmarked weapons platforms and systems together in foreign markets needs to be developed.

Secondly, the country must also double down on finding markets for big-ticket platforms like the Light Combat Aircraft Tejas, the indigenously made Advanced Towed Artillery Gun System (ATAGS), and even the BrahMos cruise missile—the exports of these platforms will significantly increase the revenue curve due to the large financial scales involved.

Finally, India has to shed the traditional ambivalence and adhocism that guided its approach to defence exports. It is now essential for the government to continue ideating and implementing institutional reforms to break into the list of top 20 global defence exporters. The results will be significant for the country’s economy and security.

This commenatry originally appeared in the Financial Express

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Harsh V. Pant

Harsh V. Pant

Professor Harsh V. Pant is Vice President – Studies and Foreign Policy at Observer Research Foundation, New Delhi. He is a Professor of International Relations ...

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Suchet Vir Singh

Suchet Vir Singh

Suchet Vir Singh is an Associate Fellow with the Strategic Studies Programme. His research interests include India’s defence services, military technology, and military history. He ...

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