India is poised to transform from a major arms importer to a significant global defence exporter, leveraging the opportunity created by Russia’s declining presence in the international arms market. The Modi government’s ambitious initiative aims to restructure India’s defence export capabilities through innovative financing mechanisms and enhanced diplomatic engagement, particularly targeting nations that have historically relied on Russian military hardware. This strategic pivot represents a watershed moment for India’s defence industry as it seeks to establish itself as a competitive alternative in the global defence supply chain amid shifting geopolitical alliances.
India’s Current Position In The Global Arms Market
India currently holds the position of the world’s second-largest weapons importer after Ukraine, accounting for 9.8% of global arms sales according to the latest Stockholm International Peace Research Institute (SIPRI) report. This represents a slight improvement from the 2018-2022 period when India’s share stood at 11% of global arms imports.
Despite being a major importer, India has made significant strides in its defence exports, which reached approximately INR 16,000 crore (approximately $1.95 billion) in the 2022-2023 financial year with exports to more than 80 countries worldwide. This growth trajectory aligns with
Russia has traditionally been India’s primary arms supplier, accounting for 36% of India’s imports, though its share has been steadily decreasing as India diversifies its supply chain to include Western countries and indigenous manufacturers. France follows as the second-largest supplier at 33%, while the United States contributes 13% of India’s weapons imports.
This diversification trend coincides with Russia’s broader decline in the global arms market, with its share of global exports falling from 22% in 2013-2017 to 16% in 2018-2022, representing a 31% drop in export volume o
At the heart of India’s defence export strategy is the expansion of the state-owned Export-Import Bank’s (EXIM) capacity to provide long-term, low-cost loans to international clients. This project focusses on nations with greater political or credit risk profiles, which often struggle to access traditional finance alternatives. The financing will largely be conducted through EXIM’s commercial business, which benefits from state backing but does not draw solely from the national budget. This financial mechanism addresses a critical barrier that has historically hampered India’s competitiveness in major arms deals against countries like France, Turkey, and China, which routinely offer comprehensive packages that include financing or credit guarantees.
