Dividends beyond the battlefield: India's defence push boosts tech skills

The biggest payoff of India's emerging military-industrial complex may be for its IT- and electronics-related skillsets

Strategic analysts may debate the success or otherwise of Operation Sindoor. But it was undoubtedly a demonstration of the capabilities of India’s fast-growing defence industry. Various nations have since expressed interest in Indian defence tech.

 

Operation Sindoor came at a good time for India’s military-industrial complex. Rising global tensions have pushed up defence budgets at a time when increasing US isolationism, and the strong-arm tariff tactics of the Donald Trump regime have opened up high-growth, high-value markets to non-American defence manufacturers.

 

The European Union and Nato (North Atlantic Treaty Organization) members, for instance, are looking at increasing defence budgets. At the same time, tensions created by the US tariff demands have led these countries to diversify away from US equipment. The EU has a €150 billion rearmament plan — the Security Action for Europe (SAFE) — and it is trying to source non-US equipment for SAFE.

 

This contrasts with earlier procurement trends where around 65-70 per cent of EU armaments were always of US origin, with the rest sourced domestically, or from other EU and Nato countries. Canada is also committing to higher defence spending while decoupling from the US. India could end up getting a small slice of that action.

 

India already sells defence equipment to many countries. It reported around ₹23,622 crore (about $2.7 billion) of defence exports in FY25, a growth of 12 per cent over FY24 (₹21,083 crore). The Defence Public Sector Undertakings exported about ₹8,389 crore in FY25, a 43 per cent year-on-year increase. The private sector exported ₹15,233 crore, roughly the same as in  FY24.

 

There’s a very wide range of items on the display shelf, ranging from frigates, missiles and radar systems to small arms and ammunition. India is prepared to export missile systems, light combat aircraft, helicopters, light transport aircraft, warships, artillery gun systems, tanks, radars, military vehicles, electronic warfare systems, and rifles.

 

The Indian Defence budget is just under 2 per cent of gross domestic product or GDP (a lot of small arms, drones, and other defence-related equipment are also procured by the home ministry). That was around $74 billion (₹6.4 trillion) in FY25, and around ₹6.8 trillion ($78.6 billion) is allocated for FY26. Around $19.7 billion of this is allocated for capital outlay in FY26, though some of that will be spent on construction.

 

Defence spending is often lumpy: One year, a nation buys submarines and the next year it doesn’t. That said, India has frequently been the world’s largest defence importer, with close to a 10 per cent share of global arms imports until 2023. That dropped to around 8.3 per cent in 2024-25. As the Indian military-industrial complex matures and grows, increasing atmanirbharta should reduce dependency on external procurement.

 

An expansion of defence exports to the $6 billion-level by FY29 is also targeted, and that would reduce net forex outflows. However, the numbers indicate India will remain dependent on defence imports for the foreseeable future even if the extent of this dependency declines. India will also remain dependent on the import of knowhow in multiple critical areas. While it does have many joint ventures, the Indian defence industry needs to develop more intellectual property.

 

Apart from the obvious strategic reasons, what are the advantages of building a military-industrial complex? One is that there will usually be off-the-shelf spinoffs for civilians. Military design involves putting together exotic materials and creating unusual applications. There are innumerable technologies developed for military usage that ended up being staples of civilian existence.

 

Think of the Internet, global positioning system, microwave ovens, duct tape, super glue, polarising sunglasses, canned food, blood transfusions, radar, insect sprays, safety razors, wristwatches, four-wheel-drive vehicles, thermal clothes, waterproof tents and footwear, cryptography, and nylons, among others. All originally developed for military use.

 

As India’s military-industrial complex develops, there will be spinoffs. These may not be as ubiquitous as the things mentioned above, but smart drones, decent hiking gear, sunglasses, and footwear, are already coming on to the market. Also, of course, manufacturing creates jobs.

 

There could be enormous advances in information technology- and electronics-related skillsets. Military equipment tends to be “smart”, and integrated air defence systems, for example, are very IT-intensive and complex. Designing and programming the equipment is a huge exercise. This could actually be the biggest payoff.