India has been looking east when it comes to arms trade: MC Analysis

India's close to finalising a deal with Indonesia on Brahmos Missile

India is in an advanced stage of talks to close a deal for the supersonic missile, Brahmos, with Indonesia, but a Moneycontrol analysis shows that this will not be the country’s first foray into arms transfers to the East and Southeast Asian region.

East and Southeast Asia emerged as the largest recipients of arms transfers in the National Democratic Alliance’s second term under Prime Minister Narendra Modi, accounting for two-thirds of India’s overall exports, as per the SIPRI Arms Transfer database analysis.

Once finalised, the $450 million deal is expected to further increase East and Southeast Asia’s share as recipients of India’s arms exports.

In the five years leading up to 2018, Southeast and East Asia accounted for just a 16.5 percent share of arms transfers from India. The region’s share hasn’t crossed 20 percent since 1999.

A rise in arms transfers has been accompanied by a decline in the dominance of South Asia as recipient, accounting for just 4.5 percent of arms transfers between 2019-23, compared with 33.6 percent between 2014-18 and 81.5 percent between 1999-2003.

Myanmar was the dominant players in India’s arms transfers between 2019-22, with Myanmar accounting for a significant share (64.5 percent) of transfers.

In 2023 alone, 90 percent of arms transfers were to Vietnam.

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A double-digit rise in defence production has also supported India’s exports.

An earlier analysis by Moneycontrol found that the pace of growth has picked up further post-pandemic. In 2023-24, defence production reached Rs 1.27 lakh crore; the government expects it to hit Rs 1.6 lakh crore this fiscal year.

Between 2019-20 and 2023-24, defence production grew at a compounded annual growth rate of 12 percent, higher than the 11.2 percent growth witnessed in the first term of this government.

India’s defence exports reached Rs 21,083 crore in FY24, up 33 percent from the previous year.

Defence exports have expanded nearly 10 times since FY15, when they were just Rs 1,900 crore.