India’s Defence Export Surge: From heavy importer to global exporter

Over the past decade, India has quietly reshaped its defence economy from a country heavily dependent on imports into a self‑reliant industrial hub with growing export heft. At the heart of this transformation lie three broad drivers: the “Make in India” industrial push, the enforcement of offsets and technology transfer in foreign acquisitions, and an explicit ambition to become a credible global defence exporter. If this trajectory continues, India is on track to emerge as one of the top mid‑tier defence manufacturing nations by the late 2020s.

From import dependence to Atmanirbharta

Until the early 2010s, India was one of the world’s largest defence importers, with critical platforms such as fighter jets, submarines, tanks, and missile systems sourced largely from Russia, Israel, France, and the United States. Defence imports often accounted for close to 60–70 percent of procurement values, leaving the country strategically and technologically vulnerable.

Starting in the mid‑2010s, New Delhi began to treat defence manufacturing not just as a security issue but as an industrial and economic one. The “Make in India” initiative, launched in 2014, included a dedicated defence‑manufacturing pillar aimed at boosting domestic production capacity, integrating Indian firms into global supply chains, and gradually reducing import dependence.

By the early 2020s, the impact had already become visible: defence production within India crossed ₹1.27 lakh crore in one of the recent fiscal years, marking an increase of over 170 percent compared with the 2014–15 level. Alongside higher domestic output, the share of indigenous content in new procurements has risen steadily, with the government consciously prioritizing “indigenously designed, developed, and manufactured” platforms.

Key pillars of India’s defence industrial strategy

India’s current defence‑industrial push rests on four interlocking pillars: policy‑led indigenisation, offset and technology‑transfer obligations, private‑sector and MSME integration, and deliberate export promotion.

1. Policy‑led indigenisation and “Make” schemes

The Ministry of Defence has introduced a set of “Make” schemes that explicitly mandate Indian ownership and control over design, development, and production. Under these schemes, the government funds a large share of initial development costs while insisting that the intellectual property and production stay within India.

By 2025, over 140 projects had already been sanctioned under the Make framework, involving more than 170 Indian companies from large original equipment manufacturers to niche startups. These projects span everything from sensors and avionics to small‑army vehicles and missile sub‑systems, creating a dense ecosystem of subsystem producers who can plug into bigger platforms.

Alongside this, the government has also introduced “Positive Indigenisation Lists” that progressively bar the import of certain categories of defence items, forcing the armed forces to source them domestically. Such lists have covered thousands of components, driving orders toward Indian defence firms and tightening the domestic supply chain.

2. Offsets and technology transfer

Offset obligations have long been a feature of India’s major defence deals: when foreign vendors win large contracts, they are typically required to reinvest a portion of the contract value back into India’s industrial base, often through technology transfer, joint ventures, or local production.

In practice, the enforcement of these offsets has been uneven, with some vendors slow to translate commitments into meaningful industrial partnerships. However, in the last several years, the government has tightened compliance mechanisms and increasingly linked offsets to long‑term technology absorption. For example, agreements on fighter aircraft, submarines, and radar systems have now explicitly included clauses for co‑development, local manufacturing, and licensed assembly, which has helped Indian firms access advanced design tools, software, and quality‑control processes.

This has allowed Indian companies to move up the value chain from simple assembly to integrated design–manufacture arrangements while gradually reducing dependence on complete knock‑down kits and foreign‑owned intellectual property.

The rise of India’s defence export engine

What distinguishes India’s current trajectory from earlier self‑reliance campaigns is that indigenisation is now being paired with a serious export ambition. New Delhi has openly set multi‑year export targets for defence and has created a dedicated export promotion framework inside the Ministry of Defence.

Tracking export growth

Defence exports have grown at an almost exponential pace over the last decade. A few years ago, exports were still in the range of a few thousand crores of rupees annually. By one of the recent fiscal years, that figure crossed ₹23,000 crore, and in the next fiscal India shattered its own record by reaching ₹38,400 crore in defence exports.

This represents a jump of over 60 percent in a single year and roughly a three‑fold increase in just five years. Public data also indicate that defence exports now touch more than 80 countries, stretching from Southeast Asia and the Middle East to Africa and parts of Latin America.

Who is exporting what?

Defence exports are now being driven by a mix of public and private players. Defence Public Sector Undertakings alone have accounted for a little over half of total export value, with firms supplying systems such as radars, missile sub‑systems, and certain naval platforms.

On the private side, export‑oriented firms have gravitated toward categories where they can leverage India’s labour and engineering advantages without competing directly with the most advanced Western platforms. Key segments include:

• Small and medium‑range missiles and guided systems

• Ground‑based surveillance and radar systems

• Electronic warfare and communications equipment

• Unmanned aerial vehicles and tactical drones

• Spare parts, maintenance, and training packages

This creates a dual‑benefit model: the domestic market provides scale and long‑term contracts, while overseas customers provide additional volumes and foreign‑exchange revenue that can be reinvested into further R&D and automation.

1. Private sector, MSMEs, and the supply‑chain ecosystem

A critical change in India’s defence‑industrial landscape has been the growing role of the private sector and Micro, Small, and Medium Enterprises. Historically, the sector was dominated by a small set of public‑sector firms and a few large private players. Today, the number of private defence manufacturers has grown sharply, and MSMEs now form the backbone of the supply chain.

2. Private‑sector participation

In one of the recent years, the private sector contributed around 23 percent of total defence production, up from a much smaller share just a decade earlier. This growth has been driven by policy shifts such as easier licensing, faster clearances, and the gradual opening of segments previously reserved for public firms.

Large private players have invested in modern manufacturing facilities, digital design labs, and advanced testing infrastructure, often in collaboration with foreign partners. At the same time, smaller private firms have carved niches in subsystems where precision, reliability, and cost‑effectiveness matter more than sheer platform scale.

3. MSMEs and component‑level integration

Government data suggest that nearly 16,000 MSMEs are now integrated into the defence supply chain, supplying everything from specialized alloys and electronic components to precision‑machined parts and composite structures. Many of these firms were previously constrained by licensing barriers, but regulatory reforms have allowed them to obtain defence‑specific clearances more quickly and to participate in consolidated procurement plans.

This MSME base has several advantages: it reduces the risk of single‑point failures in the supply chain, it lowers the cost of spares and overhauls, and it creates a distributed industrial base that can be rationally dispersed across regions instead of being concentrated in a few metros.

Make in India’s impact on defence production and exports

To appreciate the scale of change, it is useful to look at a few headline figures. The following table summarises India’s defence‑industrial trajectory over the last decade‑plus, using approximate values that reflect recent official data.

Year range(approx)	Domestic defence production (₹ in lakh cr.)	Defence exports (₹ in thousand cr)	Key policy milestones
2014–15(baseline year)	Around 0.4–0.5 lakh crore	Around 0.5–1 thousand crore	Launch of Make in India; early indigenisation push
2018–19	Around 0.7–0.8 lakh crore	Around 4–6 thousand crore	First Positive Indigenisation Lists; offset reforms
2022–23	Around 1.1–1.2 lakh crore	Around 15–18 thousand crore	“Make in India” in defence gathers momentum
2023–24	1.27 lakh crore	Over 21,000 crore	Defence production up by ~170% since 2014–15
2024–25	Sustained high production	Around 23,600 crore	Exports grow ~30x versus a decade earlier
2025–26	Further expansion	Around 38,400 crore	Record exports, 60%+ growth in one year

Several points stand out from this table. First, defence production has not merely grown; it has grown at a rate that is significantly faster than GDP growth, indicating both policy push and rising demand. Second, defence exports have gone from a marginal, almost symbolic amount to a multi‑ten‑thousand‑crore figure in just a short span, moving India from the periphery of the global defence market toward a mid‑tier position. Third, the government’s stated target of reaching around ₹3 lakh crore in defence production by 2029 implies that this trajectory is expected to continue, with export‑oriented firms playing an increasingly central role.

Strategic autonomy and supply‑chain resilience

By manufacturing more of its own platforms and components, India increases its ability to respond to crises without being hostage to foreign supply‑chain delays or political conditions. In an era where dual‑use technologies and geopolitical tensions can quickly disrupt export controls, a robust domestic base reduces the risk of critical gaps in ammunition, spares, and upgrades.

Moreover, as India participates in more offset and co‑development arrangements, it also gains tacit knowledge about system‑of‑systems integration, digital architecture, and modern logistics capabilities that are increasingly decisive in contemporary warfare.

1. Economic growth, jobs, and innovation

Defence manufacturing is capital‑intensive and high‑value, which means that growth in this sector pulls along a wide range of supporting industries from special‑purpose machinery and robotics to advanced materials and software. Every large defence platform project can involve hundreds of suppliers and thousands of skilled workers, creating a multiplier effect on employment and regional development.

Export growth further amplifies the economic impact. Foreign‑exchange inflows from defence exports can be reinvested in research, automation, and higher‑end manufacturing, helping India compete in more complex segments such as guided munitions, naval systems, and network‑centric warfare architectures.

2. Pace of reforms and bureaucracy

While the policy direction is clear, the pace of implementation often lags. Procurement procedures, trial protocols, and certification processes can still be slow and fragmented, which discourages rapid innovation and discourages some foreign partners. Streamlining clearances, harmonising standards across services, and reducing bureaucratic friction remain key hurdles.

3. Technology depth and R&D intensity

India is still catching up in several high‑end technology domains, including advanced semiconductor‑based electronics, certain propulsion systems, and cutting‑edge materials science. Domestic R&D intensity in defence remains lower than that of leading industrial powers, and many of the most advanced sub‑systems still require technology transfer or foreign collaboration.

Bridging this gap will require sustained investment in labs, universities, and state‑led innovation schemes, as well as mechanisms that better align defence needs with civilian research.

4. Export‑market competition and branding

Global defence markets are highly competitive, with established players from Europe, the United States, Russia, Israel, and an emerging set of producers in Asia and the Middle East. Indian firms must not only match price and performance but also build long‑term credibility around reliability, after‑sales support, and interoperability with existing force structures.

Branding and marketing, which are areas where some Indian defence firms have historically been weak, are now becoming as important as technical capability.

Future outlook: India as a global defence‑industrial hub

If current trends hold, India is likely to consolidate its position as a mid‑tier defence exporter with a strong domestic base by the end of this decade. Government targets for defence production and exports clearly signal that “Make in India” in defence is not a temporary slogan but a decade‑long industrial project.

Looking ahead, the most likely growth vectors include:

• Greater export volumes of small‑ and medium‑range missiles, drones, and surveillance systems to regions such as Southeast Asia, Africa, and the Gulf.

• Deepening co‑development and co‑production partnerships with Western, Israeli, and Eastern European partners that allow Indian firms access to advanced technologies while retaining significant local value addition.

• A gradual move into more complex platforms, such as naval vessels, battlefield management systems, and integrated air‑defence networks, where India can offer differentiated solutions at competitive prices.

In this context, offsets, technology transfer, and export promotion will continue to function as complementary tools rather than stand‑alone strategies. Offsets will help absorb technology, private firms and MSMEs will deepen the industrial base, and export ambitions will provide the scale and revenue needed to sustain innovation.

Conclusion

India’s defence‑industrial push driven by Make in India, enforced offsets, and deliberate export ambitions reflects a fundamental shift in how the country thinks about defence. It is no longer merely about buying weapons but about building an indigenous ecosystem that can design, produce, and export entire systems.

The numbers speak clearly: defence production has roughly tripled in little over a decade, domestic content in procurements has risen, and exports have surged from a marginal figure to over ₹38,000 crore in a single year. Even as challenges around bureaucracy, technology depth, and global competition remain, the trajectory points toward a future where India is not only self‑reliant in defence but also a credible exporter in the global market.