Prime Minister Narendra Modi‘s initiative to establish India as a global manufacturing hub has already yielded billions in affordable iPhones and pharmaceuticals. Now, he aims to expand this success to include missiles, helicopters, and battleships for foreign governments.
As the world’s second-largest arms importer after Ukraine, India is enhancing the capabilities of the state-owned Export-Import Bank (EXIM) to provide long-term, low-interest loans to clients, including those facing political or credit challenges that hinder access to traditional financing, according to two Indian officials and three industry insiders.
Additionally, New Delhi plans to significantly increase the number of defense attachés in its embassies as part of a new strategy that will involve the government directly negotiating certain arms contracts, as reported by four Indian officials. India is particularly focusing on nations that have historically depended on Russia for military supplies, according to two sources.
The plans, shared with Reuters by 15 individuals and previously unreported, represent a groundbreaking effort by the Indian government to engage in the recruitment and financing of international buyers amid a global arms buildup and shifting geopolitical alliances.
Historically, Indian officials have concentrated on acquiring fighter jets from Russia’s Sukhoi and artillery from the United States to counter threats from China and Pakistan, its two nuclear-armed neighbors. While India has maintained a small-arms manufacturing sector for some time, its private companies have only recently begun producing more advanced munitions and equipment.
The Indian ministries of defense and external affairs, along with Modi’s office, did not respond to requests for comments, and EXIM also declined to provide a statement. “India is progressing towards its goal of boosting defense exports,” stated Defense Minister Rajnath Singh on X this month.
A significant turning point occurred with Russia’s invasion of Ukraine in February 2022, as noted by an Indian official responsible for expanding arms exports. Similar to many individuals interviewed by Reuters for this report, the official requested anonymity to address sensitive governmental issues.
As Western stockpiles were sent to Kyiv, Russian factories focused their production almost entirely on munitions for the ongoing conflict. This situation left countries that had traditionally depended on Washington and Moscow— the two largest arms suppliers in the world— searching for new options. The official indicated that Delhi began receiving more inquiries due to its history of acquiring and integrating arms technology from both Western nations and Russia.
In response to inquiries from Reuters, Rosoboronexport, the Russian state arms exporter, referenced earlier statements indicating ongoing discussions with India regarding the joint production and promotion of military equipment for third-party nations that are “friendly to Russia.” The Pentagon declined to comment.
According to government data, India produced $14.8 billion worth of arms in the fiscal year 2023-2024, marking a 62% increase since 2020. Reports from Reuters have previously indicated that some Indian-manufactured artillery shells were discovered on the frontlines in Ukraine, aiding Kyiv’s defense efforts.
Delhi has begun facilitating meetings between visiting delegations and local arms manufacturers, as well as showcasing advanced equipment such as combat helicopters during military drills, according to four officials. Viraj Solanki, a research fellow at the International Institute for Strategic Studies in London, remarked that India faces obstacles in marketing its newer, high-end products. He stated, “Unless it starts utilizing its indigenous equipment more regularly and demonstrating its effectiveness, it is likely to struggle to persuade potential buyers.”
FAST AND AFFORDABLE
The government led by Modi aims to increase arms and equipment exports to $6 billion by 2029. The goal is to expand sales beyond the current focus on ammunition, small arms, and defense components that dominate military exports.
Delhi fell short of its $3.5 billion arms sales target for the most recent fiscal year by approximately one-third; however, this still represents a notable rise from the $230 million in weapons and defense components exported a decade ago.
In an era of constrained global budgets and rising defense needs, India is positioning itself as a cost-effective producer.
According to two Indian sources, India can manufacture 155 mm artillery ammunition for around $300 to $400 each, while European counterparts are priced at over $3,000.
Additionally, Indian companies have sold howitzers for about $3 million each, which is roughly half the cost of their European-made equivalents.
While Western countries that scaled back defense production after the Cold War are now working to revive their factories, state-owned Munitions India is among the Indian firms that maintained their production capabilities.
Delhi, which has recently engaged in conflicts with Pakistan and China, has faced a different strategic landscape, noted retired naval Commander Gautam Nanda, who heads KPMG’s aerospace and defense consulting in India. “Our production capacity was never reduced.”
Private companies such as Adani Defence and Aerospace, along with ammunition manufacturer SMPP, are starting to produce 155 mm artillery shells, which they report have already been requested by foreign governments.
“In light of this evolving situation, we anticipate a significant surge in demand for artillery ammunition,” stated Ashish Kansal, CEO of SMPP, whose company is establishing a facility to manufacture large caliber 155 mm artillery shells.
ENHANCED WEAPONS
India aims to leverage increased funding for arms exports through EXIM, which had a loan portfolio of $18.32 billion in the fiscal year 2023-24, to elevate its products within the value chain.
This financing will primarily be managed by EXIM’s commercial division, which has government support but does not rely solely on the national budget. According to an industry source, Indian arms manufacturers have strongly advocated for this initiative.
Many banks in India have been hesitant to provide commercial loans for arms exports due to concerns about engaging with countries that present higher credit and political risks, as noted by an Indian diplomat speaking to Reuters.
This reluctance has historically hindered India’s ability to compete for significant contracts with nations like France, Turkey, and China, which offer financing or credit guarantees, the diplomat added.
One market that India is looking to penetrate further is Brazil, where EXIM established an office in January.
Delhi is currently negotiating the sale of Akash missiles to Brasília, according to two industry sources and two Brazilian officials. Despite facing limitations in its own shipbuilding capabilities, India is also pursuing an agreement to construct battleships for Brazil, as confirmed by the same Brazilian officials and an Indian representative.
Bharat Electronics of India, which develops components for the Akash missile system, has opened a marketing office in São Paulo this year, according to two Indian industry sources.
EXIM is expected to assist in financing some of the transactions in Brazil, they noted.
Brazil’s military communicated via email to Reuters that the creators of Akash had replied to an inquiry for information, but no decision regarding the purchase has been made yet. Bharat Electronics has not provided any comments on the matter.
STRATEGIC AUTONOMY
New Delhi is concentrating its arms-export strategy on nations in Africa, South America, and Southeast Asia. According to three Indian defense officials, India intends to send at least 20 new defense attachés to its embassies abroad by March 2026.
The countries that will host these attachés include Algeria, Morocco, Guyana, Tanzania, Argentina, Ethiopia, and Cambodia. The officials noted that New Delhi is confident in its capacity to significantly boost arms exports to these nations. One official mentioned that this initiative would coincide with a decrease in the number of defense attachés assigned to Western embassies, who will be reassigned elsewhere.
These attachés are responsible for promoting Indian military equipment and have been equipped with resources to assess the defense needs of their host countries. Similar to India, many of these nations have historically procured military supplies from the Soviet Union and Russia, which contrasts with the NATO standards adopted by numerous Western manufacturers.
A notable success is Armenia, where India assigned a defense attaché for the first time last year. India has already diminished Russia’s dominance in supplying arms to Armenia, a former Soviet republic that has expressed a need to diversify away from Moscow.
Between 2022 and 2024, India accounted for 43% of the arms imported by Armenia, a significant increase from nearly zero between 2016 and 2018, according to data from the Stockholm International Peace Research Institute. Rosoboronexport stated in March that SIPRI, which relies on publicly available information, does not possess complete data.
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