India's small arms exports rose from ₹778.72 crore in FY19 to ₹7,215.74 crore in FY26. This growth is driven by private sector participation and government reforms in defense manufacturing. Investors should track how licensing speeds and public sector dominance affect the future growth of private defense firms.
Detailed Coverage
India’s small arms export sector has seen significant growth, with exports reaching ₹7,215.74 crore in the 2025-26 fiscal year, compared to ₹778.72 crore in 2018-19. This expansion is supported by the 2021 restructuring of the Ordnance Factory Board into seven distinct defense public sector undertakings, alongside a broader push for indigenous manufacturing.
Private Sector Role and Global Demand
Private companies have moved beyond basic component manufacturing to designing and building advanced weapons. Bengaluru-based SSS Defence has secured international contracts, including the supply of sniper rifles to the Armenian Ministry of Defence and suppressors to France. The company plans to export approximately 100,000 weapons next year, supported by an existing order book of 40,000 units. Similarly, Zen Technologies has established a presence in over 30 countries with its combat training simulators, with exports now accounting for nearly 38% of its total revenue.
Geographically, Indian defense equipment is increasingly reaching European markets, such as Romania and Slovenia, alongside consistent demand from Armenia and Nepal. The Indo-Russian joint venture producing AK-203 rifles in Amethi is also expected to begin its first international shipments in 2026, targeting markets in Africa and West Asia.
Industry Hurdles and Operational Risks
Despite the upward trend, the sector faces structural challenges. Public sector undertakings continue to control approximately 75% of total production, which limits the market share available to private players. Furthermore, unpredictable procurement cycles and lengthy licensing processes remain significant bottlenecks. For instance, Lokesh Machines reported a three-year wait for the licensing of its ASMI submachine gun, illustrating the risk of regulatory delays for newer entrants.
For investors, the long-term viability of this growth story depends on the government's ability to streamline licensing and the private sector's capacity to scale production to meet international standards. Future monitoring should focus on the timing of new export contracts, the realization of current order books, and any policy shifts that may improve ease of doing business for private defense manufacturers. Monitoring the contribution of exports to total revenue for listed entities will be essential to understanding their reliance on international markets versus domestic defense procurement.