India's defense exports lag, $1.6B needed to meet 2025 target
What's the story
In 2020, India set an ambitious target of $5 billion in defense exports by 2025. The Defense Production and Export Promotion Policy (DPEPP) was also introduced the same year to achieve the target.
Now, the latest data from Union Minister Rajnath Singh reveals that the country has reached ₹21,083 crore in defense exports.
At current exchange rates, the $5 billion target would amount to over ₹43,000 crore, leaving a $1.6 billion gap to be filled in the coming months.
Global reach
India's defense exports reach over 100 countries
Despite being a net importer of defense equipment, India has come a long way as an exporter.
The country now provides arms and ammunition, radars, electronics, rockets, naval platforms, drones among other components to over 100 countries across the globe.
This global reach is mainly due to the competitive pricing of Indian defense systems like the Akash and BrahMos missiles developed by the Defense Research and Development Organization (DRDO), which are often 30-40% cheaper than Western or Russian alternatives.
Strategic partnerships
India's defense sector: A hub for international collaboration
India's defense sector has also drawn international attention, with countries such as the Philippines, Indonesia, and Vietnam considering India a counterweight to China's dominance.
Middle Eastern and African countries consider India a dependable supplier that doesn't place political conditions that are common with Western countries.
German Chancellor Olaf Scholz has shown interest in strengthening defense ties with India, emphasizing possible joint projects like submarine construction during his October 2024 visit to New Delhi.
Potential deal
France negotiates to acquire India's Pinaka rocket launcher system
In a major development, France is said to be in advanced talks to purchase India's Pinaka multi-barrel rocket launcher system.
This would be a strategic shift as France has always been a supplier to India.
The possible deal highlights the increasing global recognition of India's defense capabilities and its growing role as an exporter in the international arms market.
Competitive advantage
India's competitive edge in defense exports
India's defense equipment is competitively priced owing to lower labor and production costs, without compromising on quality.
The country also offers attractive financing options such as deferred payments and government-backed credit lines.
For instance, the Export-Import Bank Of India (EXIM Bank) extended a $100 million credit line to Vietnam for defense purchases as part of strategic defense cooperation between the two countries.
Budget allocation
Budget 2025 allocates ₹1.8 lakh crore for armed forces
The 2025 budget allocated ₹1.8 lakh crore under the Armed Forces' capital budget with an emphasis on modernization. Of this, ₹1.12 lakh crore will be utilized for procurement from domestic industries.
DRDO's allocation has been hiked by 12.5% to ₹26,816.8 crore, with a large chunk reserved for capital expenditure and financing R&D projects in partnership with private parties through DRDO's Technology Development Fund scheme.