India offers long-term, low-cost loans for arms; provides alternative to Russian customers: Report

The Indian government is aiming to increase exports of missiles, helicopters, and battleships, intensifying the country’s efforts to become a significant player in the global arms market. To facilitate this, the government is enhancing the capabilities of its Export-Import Bank (EXIM) to offer long-term, low-cost loans, particularly to countries with challenging credit profiles. This move aims to provide an alternative source of financing for nations traditionally dependent on Russian arms.

According to a report in Reuters, New Delhi also plans to increase its defence attachés in foreign missions. These attachés will target countries like Algeria, Morocco, Guyana, Tanzania, Argentina, Ethiopia, and Cambodia by March 2026. The decision is part of a broader strategy to penetrate markets historically dominated by Russian arms exports. An Indian official noted that the strategic shift was partly prompted by Russia's invasion of Ukraine, which reshaped global arms supply dynamics.

Data reveals a significant rise in India's arms production, which reached $14.8 billion in the 2023-2024 fiscal year, marking a 62 per cent increase since 2020. This growth aligns with Prime Minister Narendra Modi's vision of doubling arms-and-equipment exports to $6 billion by 2029. "India is marching towards achieving the target of increasing defence exports," Defence Minister Rajnath Singh had earlier written on X, underlining the government's commitment to expanding its defence export footprint.

India's arms export strategy also leverages competitive pricing. For instance, the country produces 155 mm artillery ammunition at prices significantly lower than European alternatives. According to two Indian sources, the country can manufacture 155 mm artillery ammunition for approximately $300 to $400 per piece, significantly lower than the European alternatives priced at over $3,000. Additionally, Indian companies have been successful in selling howitzers at around $3 million each.  This cost advantage is crucial as India competes with France, Turkey, and China, which offer financing or credit guarantees for their arms exports. Moreover, EXIM's role in financing Indian arms exports is expected to enhance the attractiveness of India's defence products.

To further bolster its export capabilities, India is targeting Brazil for potential deals involving Akash missiles and battleships. This initiative follows EXIM's decision to open an office in Brazil, with Bharat Electronics establishing a marketing presence in São Paulo. The move underscores India's strategic push into South American markets, where it aims to capture a share of the growing demand for military equipment.

India's approach appears promising as its competitive pricing and financing schemes attract attention. 
A notable success in India's strategy is its increasing arms exports to Armenia, which had previously relied heavily on Russia. Between 2022 and 2024, India accounted for 43 per cent of Armenia's arm imports, significantly reducing Russia's monopoly. This achievement exemplifies India's potential to penetrate markets traditionally dominated by other major exporters.

Despite these advancements, challenges persist. India's ability to expand its arms production efficiently while maintaining quality and cost competitiveness is essential. As SMPP's chief executive Ashish Kansal remarked, "With this changing scenario, definitely we see a huge, massive demand for artillery ammunition," reflecting the growing global demand that India aims to meet.

(With Reuters inputs)