India’s defence exports surge forward in remarkable growth

• India stands out as a resilient exporter of defence products in a world characterized by a turbulent, ever-changing, and unpredictable geostrategic landscape

• India’s onslaught in defence manufacturing expanded from coastal surveillance systems and naval vessels to missiles and rocket launchers

• India’s DPEPP policy aims to achieve a turnover of $25 billion in defence manufacturing, including $5 billion in exports, by 2025.

• India’s defence production has surpassed $12 billion recently, nearly doubling in the last five years, with 80% from the public sector and 20% from the private sector.

India has risen as a significant player in the global arms market, with its defence exports growing over 1000% in the past eight years. These exports now reach over 85 countries worldwide, placing India among the top 25 defence exporters globally, with over 100 firms actively involved in exporting defence products.

The South Asian country stands out as a resilient exporter of defence products in a world characterized by a turbulent, ever-changing, and unpredictable geostrategic landscape. It offers a diverse range of defence products to nations around the globe.

India’s defence exports surge to record high

India’s onslaught in defence manufacturing has enhanced its strategic presence on the global stage as its defence production has expanded from coastal surveillance systems and naval vessels to missiles and rocket launchers.

India is now positioned as a reliable supplier in the global arms trade. Its defence exports reached an all-time high of Rs. 21,083 crores in 2023-24, up from Rs. 15,920 crores in 2022-23, representing a 32.5% growth.

India’s tremendous growth in defence production and exports is attributed to key policy initiatives and reforms undertaken by the Indian government. There has been increased awareness and strategic sensitivity towards making India’s defence sector self-reliant.

The clarion call for self-reliance has been present since Independence, but it has witnessed a new wave in recent years, particularly post-COVID from 2021 onwards.

Key reforms

Key reforms implemented by the government, such as simplifying the industrial licensing process with a longer validity period, rationalizing the defence product list requiring industry licenses, and liberalizing the foreign direct investment (FDI) policy to allow 74% FDI under the automatic route, have been steps taken to enhance indigenous production and exports.

The establishment of the Defence Innovation Organisation in 2018 promoted innovation in the defence sector and increased outreach to produce state-of-the-art defence products. It has become the focal point for collaboration between academia, the private sector, and the defence industry.

Additionally, the release of the Defence Production and Export Promotion Policy (DPEPP) in 2020 (following the Defence Production Policy 2011, Defence Production Policy 2016, and Defence Export Promotion Policy 2018) has provided a significant boost to the defence industry in India.

This policy aims to achieve a turnover of $25 billion in defence manufacturing, including $5 billion in exports, by 2025. It achieves this by simplifying export procedures, enhancing the ease of doing business in the industry, and creating a favourable environment for defence exports. The offset clause in the policy is an important mechanism available to the domestic industry to enhance their export capabilities.

India is also participating regularly in international defence exhibitions and events such as DefExpo and Aero India. These platforms showcase India’s defence products and technologies to potential buyers worldwide, leading to noteworthy networking, collaborations, and defence deals.

The Defence Exports Steering Committee and Export Promotion Body play significant roles in coordinating and promoting the export of defence products from India.

India has launched several initiatives, including Mission DefSpace involving the three services in the space domain, the Innovations for Defence Excellence (iDEX) scheme involving start-ups and micro, small, and medium enterprises (MSMEs), and an indigenisation portal called SRIJAN to facilitate indigenisation of the defence manufacturing industry, among others. These efforts have streamlined defence manufacturing and exports.

The establishment of two Defence Industrial Corridors, one each in Uttar Pradesh and Tamil Nadu, has proven instrumental in enhancing India’s capabilities to produce and export more.

Make in India Initiative

Moreover, India’s emphasis on indigenous defence production under the Make in India Initiative has positively contributed to its defence exports.

India periodically releases Positive Defence Indigenisation Lists that restrict the import of specified defence items after certain timelines. India focuses on technology transfer and collaboration with foreign partners instead of outright purchases to enhance its capabilities and establish itself as a global player in defence exports.

The budget allocation to the defence sector reflects the seriousness of the government’s initiative to make India a net defence exporter.

In the interim Union Budget for the Financial Year 2023-24, the Ministry of Defence has been allocated a total budget of $72.2 billion (Rs. 5,93,537.64 crore), accounting for 13.18% of India’s total budget for 2023-24.

Additionally, a Green Channel Status Policy (GCS) has been introduced to promote private sector investments in defence production. This policy aims to enhance the role of the private sector in defence production. A well-established defence ecosystem is in the making, and the returns are already visible.

The value of defence production in India has crossed Rs. 1 lakh crore ($12 billion) in recent years, nearly doubling over the last five years. About 80% of the defence production comes from the public sector, with roughly 20% from the private sector.

The private defence manufacturing sector is steadily gaining traction, with several companies investing in research and development, as well as infrastructure, to support defence manufacturing and exports.

India’s diverse defence exports

India’s defence exports encompass a wide range of instruments, including missiles, rockets, torpedoes, artillery guns, and drones, among others.

Moreover, India has diversified its defence export portfolio beyond traditional products like arms and ammunition, now including services such as maintenance, repair, and overhaul (MRO) for defence equipment, as well as training and consultancy services.

India currently exports defence products to over 85 countries worldwide, significantly integrating its defence industry with global supply chains.

India’s supply chains now extend to Africa, Southeast Asia, and the Middle East for defence exports.

India’s supply chains now connect with emerging markets in regions like Africa, Southeast Asia, and the Middle East for defence exports. These regions have growing defence budgets and requirements, offering opportunities for Indian defence manufacturers to expand their market presence. India’s defence exports have enhanced military interoperability, expanded options for joint operations, and positively impacted the diplomatic and strategic geopolitical stance of partner nations.

Steady growth

Overall, India’s defence exports have witnessed steady growth over the past decade, driven by policy initiatives, technological advancements, international collaborations, and market diversification.

Indian defence products have gained recognition for their quality and cost competitiveness in the global market, a significant factor driving India’s defence exports as countries seek reliable and affordable defence solutions.

With continued focus and strategic investments, India aims to further strengthen its position as a significant player in the global defence export market.

India has a wide variety of export-worthy “major military equipment” that would further substantiate its share in the global market, bringing it closer to reaching the goal of $5 billion in defence exports.