🗞️ Why in News India’s defence exports reached a record ₹38,424 crore in FY 2025–26 — a 62.66% surge over FY 2024–25 (₹23,622 crore). Business Standard argues that while the headline is impressive, structural bottlenecks — particularly India’s near-total dependence on imported aero-engines for all frontline combat aircraft — cap how far “indigenisation” truly extends. Sustained momentum requires shifting from assembly and integration to genuine deep technology development.
The Export Milestone in Context
| Year | Defence Exports | Growth |
|---|---|---|
| FY 2018-19 | ₹10,745 crore | — |
| FY 2022-23 | ₹15,920 crore | — |
| FY 2024-25 | ₹23,622 crore | — |
| FY 2025-26 | ₹38,424 crore (~$4.6 billion) | +62.66% |
Breakdown (FY26):
- Defence PSUs (DPSUs): ₹21,071 crore (up 151% YoY)
- Private sector: ₹17,353 crore
Top export destinations: USA, France, Armenia, Maldives, Sri Lanka, Mauritius, Philippines, UAE Key export items: Brahmos cruise missiles (Philippines contract — landmark export), artillery ammunition, radar systems, helicopters, offshore patrol vessels, small arms
The growth is real. India has moved from a near-zero defence export position in 2014 to the world’s top-25 defence exporters in a decade — a genuine policy success.
Where the Indigenisation Story Gets Complicated
The Aero-Engine Dependency
Every frontline Indian combat aircraft flies on a foreign engine:
| Aircraft | Engine | Origin |
|---|---|---|
| Tejas Mk-1 / Mk-1A | GE F404-GE-IN20 (90 kN wet thrust) | USA (GE Aerospace) |
| Tejas Mk-2 (planned) | GE F414 (98 kN) | USA (GE Aerospace) |
| AMCA (planned, 2035+) | GE F414 + Safran co-development | USA / France |
| Su-30 MKI (262 aircraft) | AL-31FP | Russia (Sukhoi/Saturn) |
| Mirage 2000 (49 aircraft) | SNECMA M53 | France |
| MiG-29 / MiG-29K | RD-33 | Russia |
Why this matters: Aero-engines are the most technologically complex and strategically controlled defence components. Engine supply can be withheld as geopolitical leverage. India learned this with Russian AL-31FP supply disruptions during periods of diplomatic friction.
The Kaveri Engine Failure — A Case Study
India’s Kaveri engine programme — DRDO’s effort since the 1980s to develop an indigenous engine for Tejas — failed to meet the required thrust specifications:
- Target: 85+ kN wet thrust
- Achieved: ~73 kN wet thrust (insufficient for Tejas combat weight requirements)
- Timeline overrun: 30+ years, still not flight-cleared
- Current status: Being repurposed for an unmanned aircraft variant; not suitable for manned fighter
The Kaveri failure is not for lack of investment in isolation — it reflects a broader structural deficit in India’s high-temperature metallurgy and precision manufacturing ecosystem, which cannot be resolved by DRDO alone.
R&D Investment — The Structural Constraint
India’s total national R&D expenditure stands at approximately 0.64% of GDP (Economic Survey 2024-25). For comparison:
| Country | R&D as % of GDP |
|---|---|
| USA | 3.5% |
| China | 2.4% |
| Israel | 5.4% |
| South Korea | 4.9% |
| India | 0.64% |
Important clarification: The 0.64% figure represents India’s entire national R&D across all sectors. Defence R&D specifically — through DRDO’s budget of ₹26,816 crore in FY26 — represents approximately 0.07–0.08% of GDP. DRDO receives only about 3.94% of India’s total defence budget.
The Missing Ecosystem
Deep technology indigenisation requires an industrial-technological ecosystem India is still building:
| Capability Gap | Current Status |
|---|---|
| High-temperature turbine blade metallurgy | Underdeveloped; imported alloys |
| Precision casting and forging | Growing through private sector but limited |
| Defence-grade semiconductors | Near-zero domestic production |
| Propulsion test infrastructure | GTRE (Kaveri) has limited capacity |
| Private sector R&D incentive | Limited defence R&D tax incentives |
The Policy Architecture
The government has created enabling structures — but their effectiveness depends on ecosystem development:
| Policy | Significance |
|---|---|
| Defence Production & Export Promotion Policy (DPEPP) 2020 | Target: ₹1.75 lakh crore turnover by 2025; $5 billion exports |
| Positive Indigenisation Lists | 509+ items reserved for domestic procurement; prevents imports |
| iDEX (Innovations for Defence Excellence) | Funds defence tech startups; Rs 100 crore corpus |
| Two Defence Corridors | UP (Lucknow-Aligarh-Kanpur) and Tamil Nadu — anchor industrial clusters |
| FDI liberalisation | 74% automatic FDI in defence; 100% under government route |
The Editorial’s Core Argument
Business Standard does not dismiss the export numbers — it contextualises them. The argument: India is excelling at the integration layer (assembling, combining, and exporting platforms and subsystems) while remaining dependent on foreign suppliers for the hardest technological components (engines, seekers, advanced electronics).
This is not sustainable as a long-term defence strategy. Sustained momentum requires:
- Dedicated national aero-engine development programme with ring-fenced multi-decade funding
- Private sector-led defence R&D with DRDO in a coordination (not monopoly) role
- Defence industrial corridors with genuine technology transfer conditions on all FDI
- STEM talent pipeline for advanced materials and propulsion science
UPSC Relevance
| Paper | Angle |
|---|---|
| GS3 — Economy | Defence manufacturing; indigenisation; PLI for defence; export policy |
| GS3 — Security | Technology dependence; aero-engine imports; DRDO |
| GS2 — Governance | DPEPP 2020; iDEX; defence corridor policy |
| Mains Keywords | DRDO, Kaveri engine, GE F414, indigenisation, DPEPP 2020, iDEX, Positive Indigenisation List, defence corridor, R&D investment |
📌 Facts Corner
India Defence Exports FY26: ₹38,424 crore | Growth: 62.66% over FY25 (₹23,622 crore) | DPSUs: ₹21,071 cr | Private sector: ₹17,353 cr | Aero-engine dependence: Tejas Mk-1A → GE F404 (USA) | Su-30 MKI → AL-31FP (Russia) | Mirage 2000 → SNECMA M53 (France) | MiG-29 → RD-33 (Russia) | Kaveri engine: ~73 kN achieved vs 85+ kN required — not flight-cleared for Tejas | India total R&D/GDP: 0.64% (all sectors; DRDO defence R&D ~0.07%) | DRDO budget FY26: ₹26,816 crore (~3.94% of defence budget) | GS3: Economy, Security & Defence
