Forest Services
India’s Defence Export Growth in 2025-26: Overview
India’s defence exports reached a record Rs 38,424 crore in the fiscal year 2025-26, marking a 62.66% increase from Rs 23,646 crore in 2024-25, according to the Ministry of Defence (MoD) and reported by the Indian Express (2026). This surge reflects strategic policy reforms and enhanced indigenous manufacturing capabilities. The export portfolio includes missiles, naval vessels, and electronic warfare systems, with major markets in the UAE, Saudi Arabia, and South Africa accounting for 60% of exports (DGDE Report 2026). This growth positions India as an emerging global defence supplier, increasing its share in the global defence export market from 1.2% in 2020 to 2.5% in 2026 (SIPRI 2025).
UPSC Relevance
- GS Paper 3: Defence Production and Exports, Defence Procurement Procedures, Economic Development
- GS Paper 2: Role of Ministry of Defence, Export Controls, International Relations
- Essay: Impact of Make in India and Atmanirbhar Bharat on India’s strategic autonomy
Legal and Institutional Framework Governing Defence Exports
Defence exports in India are regulated under multiple legal instruments. The Defence Production Policy 2020 and Defence Procurement Procedure (DPP) 2023 outline production and export guidelines. The Arms Act, 1959 (Sections 3 and 7) controls arms trade licensing and penalties for violations. Export controls are also governed by the Foreign Trade (Development and Regulation) Act, 1992. The Ministry of Defence exercises authority under the Government of India (Allocation of Business) Rules, 1961 to oversee policy formulation and implementation. The Directorate General of Defence Export Controls (DGDE) is the nodal agency for licensing and regulating defence exports.
- MoD: Policy formulation, export promotion, and coordination
- DGDE: Licensing, compliance monitoring, and facilitation
- DRDO: Indigenous technology development
- HAL and DPSUs: Production and supply of defence equipment
Economic Dimensions of Defence Export Growth
The fiscal year 2025-26 saw India allocate Rs 6.5 lakh crore to defence, with 25% earmarked for capital procurement (Union Budget 2025-26). The 62.66% export growth is linked to enhanced indigenous production, which increased by 40% post the Make in India and Atmanirbhar Bharat initiatives (MoD Annual Report 2025). India’s global defence export share rose from 1.2% in 2020 to 2.5% in 2026, against a global defence market valued at approximately USD 2 trillion (SIPRI 2025). Export revenues primarily derive from missile systems, naval vessels, and electronic warfare equipment, reflecting diversification beyond traditional platforms.
- Rs 38,424 crore defence exports in 2025-26 (Indian Express, 2026)
- 40% rise in indigenous production since 2020 (MoD Annual Report 2025)
- Top export destinations: UAE, Saudi Arabia, South Africa (60% of exports)
- Global defence market size: USD 2 trillion (SIPRI 2025)
Comparative Analysis: India vs South Korea Defence Export Growth
India’s 62.66% growth in defence exports starkly contrasts with South Korea’s 15% increase, reaching USD 8 billion in 2025-26. South Korea’s sustained government subsidies and export-friendly policies have long supported its defence industry. India’s rapid growth indicates successful catch-up efforts but also exposes structural gaps in export facilitation and private sector integration.
| Parameter | India (2025-26) | South Korea (2025-26) |
|---|---|---|
| Defence Export Value | Rs 38,424 crore (~USD 4.7 billion) | USD 8 billion |
| Export Growth Rate | 62.66% | 15% |
| Government Support | Make in India, Atmanirbhar Bharat | Subsidies, export incentives |
| Private Sector Participation | Limited, complex licensing | High, streamlined export processes |
| Key Export Markets | Middle East, Africa | Global, including US and Europe |
Critical Challenges in India’s Defence Export Ecosystem
Despite the export surge, India faces bottlenecks. Private sector involvement remains limited due to licensing complexities under DGDE, causing delays in contract finalization. Compared to South Korea and Israel, which have streamlined export facilitation frameworks, India’s regulatory environment is cumbersome. This limits scalability and diversification of defence exports. Additionally, the export ecosystem requires better integration of MSMEs and startups to sustain growth momentum.
- Complex licensing procedures delay contracts (DGDE reports)
- Limited private sector integration restricts innovation and scale
- Export facilitation lacks streamlined single-window clearance
- Need for enhanced export diplomacy coordination with Ministry of External Affairs
Significance and Way Forward
The 62.66% increase in defence exports in 2025-26 marks a strategic milestone for India’s defence industrial base. It validates policy reforms like the Defence Production Policy 2020 and DPP 2023, and the impact of Make in India. To sustain this trajectory, India must simplify export licensing, enhance private sector participation, and strengthen export diplomacy. Expanding R&D investments via DRDO and fostering public-private partnerships will improve technology sophistication. Aligning export controls with global best practices will help India compete with established exporters like South Korea and Israel.
- Simplify DGDE licensing with single-window clearance
- Promote private sector and MSME participation through incentives
- Enhance DRDO collaboration with industry for export-ready technologies
- Strengthen export diplomacy via MoD-MEA coordination
- Benchmark export control frameworks against global leaders
- The Defence Procurement Procedure (DPP) 2023 governs defence export licensing.
- The Arms Act, 1959 regulates arms trade and export controls.
- The Directorate General of Defence Export Controls (DGDE) is responsible for issuing export licenses.
Which of the above statements is/are correct?
- India’s defence exports increased by over 60% in 2025-26.
- South Korea’s defence exports grew by more than 50% in the same period.
- India’s share in global defence exports reached 2.5% in 2026.
Which of the above statements is/are correct?
What legal acts regulate India’s defence exports?
India’s defence exports are regulated primarily under the Defence Production Policy 2020, Defence Procurement Procedure 2023, the Arms Act, 1959 (Sections 3 and 7), and the Foreign Trade (Development and Regulation) Act, 1992. The DGDE oversees export licensing.
What was the value and growth rate of India’s defence exports in 2025-26?
India’s defence exports reached Rs 38,424 crore in 2025-26, a 62.66% increase from Rs 23,646 crore in 2024-25 (Indian Express, 2026).
Which institutions are key to India’s defence export ecosystem?
The Ministry of Defence formulates policy; DGDE regulates exports; DRDO develops indigenous technologies; HAL and other DPSUs manufacture defence equipment.
How does India’s defence export growth compare with South Korea’s?
India’s defence exports grew by 62.66% in 2025-26, while South Korea’s grew by 15%, reaching USD 8 billion. South Korea benefits from sustained subsidies and streamlined export policies.
What are the main challenges limiting India’s defence export potential?
Challenges include complex licensing procedures under DGDE, limited private sector integration, and lack of streamlined export facilitation compared to competitors like South Korea and Israel.
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