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Defence exports skyrocket to record Rs 38,424cr in 2025-26, 62.7 per cent rise over previous fiscal

April 02, 2026 4 min read Internal Security Economics GS3 (Security Economy)
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What Happened

  • India's defence exports reached an all-time high of Rs 38,424 crore in FY2025-26, a 62.7% jump from Rs 23,622 crore in FY2024-25.
  • The milestone exceeds the government's original export target of Rs 35,000 crore ($5 billion) set under the Defence Production and Export Promotion Policy (DPEPP) 2020.
  • Defence Public Sector Undertakings (DPSUs) drove the surge — their exports grew 151% — while private sector exports grew 14%, contributing Rs 21,071 crore and Rs 17,353 crore respectively.
  • India now exports defence equipment to more than 80 countries; the number of exporters rose from 128 to 145 firms (a 13.3% increase) in a single year.
  • The United States remains the top destination, procuring sub-systems including aircraft fuselages; other key buyers include Philippines, UAE, Armenia, Egypt, Mauritius, Israel, Italy, and Sri Lanka.

Static Topic Bridges

Defence Production and Export Promotion Policy (DPEPP) 2020

Launched in August 2020 as the Ministry of Defence's overarching policy for building self-reliance and export capability, DPEPP 2020 set twin targets: achieving a defence production turnover of Rs 1.75 lakh crore and exports of Rs 35,000 crore ($5 billion) in aerospace and defence goods and services by 2025. The policy was embedded within the broader Atmanirbhar Bharat framework. The government has since revised its export ambition upward to Rs 50,000 crore by 2029.

  • DPEPP 2020 replaced the earlier Defence Production Policy of 2011.
  • It introduced preferential procurement for domestic industry, a Positive Indigenisation List banning imports of specified items, and a Defence Industrial Corridor (Uttar Pradesh and Tamil Nadu).
  • FY26 exports of Rs 38,424 crore surpass the original Rs 35,000 crore target — a milestone achieved a year after the 2025 deadline.
  • The revised target is Rs 50,000 crore in exports and Rs 3 lakh crore in production by 2029.

Connection to this news: India's record FY26 exports confirm that DPEPP 2020's core export goal has finally been met, though the production turnover target of Rs 1.75 lakh crore remains in progress (FY25 production reached Rs 1.54 lakh crore).

Atmanirbhar Bharat in Defence: Key Initiatives

The government's Atmanirbhar Bharat push in defence rests on several interlocking instruments — iDEX (Innovations for Defence Excellence) for startup-led R&D, multiple editions of the Positive Indigenisation List restricting imports, and increased FDI ceiling (raised to 74% under automatic route). The Department of Military Affairs (DMA), created in 2020, coordinates procurement and production priorities.

  • DPSUs include HAL, BEL, BEML, BDL, MDL, GRSE, and others — their FY26 export surge (151%) reflects success in munitions, fuses, and lightweight torpedoes.
  • Private sector exports span armoured vehicles, small arms, bulletproof jackets, and UAVs.
  • India's FDI limit in defence was raised to 74% (automatic route) and 100% (government route) — attracting foreign OEMs to partner with Indian firms.
  • iDEX has facilitated over 300 contracts with defence startups and MSMEs since 2018.

Connection to this news: The 145 exporting firms (up from 128) and the private sector's Rs 17,353 crore contribution reflect how iDEX, liberalised FDI, and Make in India policy have broadened the defence industrial base beyond PSUs.

India's Strategic Export Diversification

Historically an arms importer (India was the world's largest arms importer for several years), India's shift to a net exporter position carries strategic significance. Exports to the Philippines, Armenia, Mauritius, and Sri Lanka reflect India's Act East Policy and Indian Ocean outreach. Sales to NATO-adjacent countries (USA, Italy) validate quality benchmarks for Indian-manufactured platforms.

  • India was the world's largest arms importer in the 2010-2019 period according to SIPRI data.
  • The US procuring fuselages and sub-systems signals integration into global defence supply chains, not just end-product sales.
  • Armenia became a notable export destination after India supplied Pinaka rocket systems and other arms post-2022.
  • The Rs 38,424 crore figure includes both goods and services (maintenance, repair, overhaul).

Connection to this news: The geographic spread to 80+ countries and the dominance of the US as top buyer represent a structural shift — Indian defence exports are now driven by global supply chain integration, not only bilateral strategic gifting.

Key Facts & Data

  • FY26 exports: Rs 38,424 crore (approx. $4.6 billion at current rates)
  • Growth: 62.7% over FY25 (Rs 23,622 crore)
  • DPSUs' share: Rs 21,071 crore (54.84%), growth 151% YoY
  • Private sector share: Rs 17,353 crore (45.16%), growth 14% YoY
  • Exporting firms: 145 (up from 128 in FY25)
  • Countries reached: 80+
  • Top buyer: USA (sub-systems, fuselages); followed by Philippines, UAE, Armenia, Egypt
  • DPEPP 2020 export target: Rs 35,000 crore — now surpassed
  • Revised 2029 target: Rs 50,000 crore in exports; Rs 3 lakh crore in production