Defence Exports from India. Compliances, Licensing, Benefits & Opportunities

India's Defence Export Landscape

India's defence exports have grown from roughly $250 million in 2014 to $2.63 billion in FY2024. A tenfold increase in a decade. The government has set an ambitious target of $5 billion in annual defence exports by 2025, and policy reforms since 2018 have accelerated the trajectory.

Indian defence products now reach 85+ countries. The top export destinations include the United States, France, Armenia, Egypt, and Israel. Product categories range from complete missile systems and naval vessels to avionics sub-assemblies, personal protective equipment, and dual-use electronics.

The growth is driven by three factors: aggressive policy liberalization (100% FDI, simplified licensing, positive import-substitution lists), the maturation of India's private defence manufacturing sector, and geopolitical shifts that have made several countries seek alternatives to traditional Western and Russian suppliers.

Regulatory Framework

Defence exports from India sit at the intersection of multiple laws and regulatory bodies. Understanding which authority does what is essential before you apply for any authorization.

Arms Act 1959 and Arms Rules

The foundational legislation governing manufacture, sale, possession, and export of arms and ammunition in India. Any entity manufacturing defence items must hold a licence under this Act, administered by the Ministry of Home Affairs. The Arms Rules specify categories of prohibited and controlled weapons, and the licensing conditions for manufacturers and dealers.

SCOMET List (Schedule 2 of ITC-HS)

The Special Chemicals, Organisms, Materials, Equipment, and Technologies (SCOMET) list is India's export control list, maintained by DGFT as Schedule 2 of the ITC(HS) classification. It is divided into nine categories (0 through 8). Category 6 (the Munitions List) is the primary category for defence exports, covering conventional arms, ammunition, military vehicles, and related technology. Other categories cover dual-use items that may also require authorization depending on end-use.

For a detailed breakdown, see our SCOMET export controls guide and the SCOMET deep dive.

Defence Acquisition Procedure (DAP 2020)

Successor to the Defence Procurement Procedure (DPP), DAP 2020 governs how India's Ministry of Defence procures defence equipment. While primarily a procurement framework, it directly impacts exports through offset obligations on foreign vendors, the Buy (Indian-IDDM) category that creates exportable indigenous platforms, and the Strategic Partnership model that establishes private-sector OEMs.

Key Regulatory Bodies

End-User Certificate (EUC) Requirements

Every defence export requires an End-User Certificate from the buyer's government. The EUC must confirm the identity of the final end-user, the specific end-use of the items, and a non-re-transfer clause stating the items will not be diverted to a third country without India's prior consent. The EUC must be issued by an authorized government agency (typically the Ministry of Defence or equivalent) in the importing country. DDP verifies the authenticity of the EUC through diplomatic channels before issuing the NOC.

Types of Defence Exports

Indian defence exports span a wide spectrum, from complete weapon systems to components and dual-use items. The regulatory requirements and licensing timelines vary by category.

Export Authorization Process. Step by Step

The defence export authorization process involves multiple agencies. Here is the end-to-end flow from manufacturing licence to customs clearance.

If you manufacture defence items, you need an Industrial Licence under Schedule V of the Industries (Development and Regulation) Act 1951. Apply online through the DPIIT portal. The licence specifies the categories of defence items you are authorized to manufacture, the annual production capacity, and conditions on technology transfer. Processing time: 4-8 weeks.

Submit your export proposal to DDP, Ministry of Defence. The application must include: product specifications and technical parameters, quantity and value, destination country and end-user details, End-User Certificate from the buyer's government, and a declaration of any foreign-origin technology or components embedded in the product (critical for ITAR compliance).

DDP evaluates the proposal against India's foreign policy objectives, strategic interest, and international obligations. For non-sensitive items, DDP may issue the NOC directly. For sensitive items, DDP initiates inter-ministerial consultation.

With the DDP NOC in hand, apply for a SCOMET export authorization through the DGFT portal. The application requires your IEC, Industrial Licence number, DDP NOC reference, product classification against the SCOMET list, End-User Certificate, and a signed undertaking on end-use. See our DGFT portal guide for step-by-step navigation and our export licence guide for restricted goods for general DGFT licensing procedures.

The EUC should ideally be obtained before Step 2, as DDP requires it with the NOC application. The buyer's government must issue the EUC on official letterhead, specifying the end-user entity, the items being purchased, the intended use, and a non-re-transfer commitment. India's diplomatic mission in the buyer's country may assist with verification.

For strategically sensitive exports (complete weapon systems, missiles, nuclear-capable delivery systems, or exports to sensitive destinations) DDP convenes an inter-ministerial committee including the Ministry of External Affairs, Ministry of Defence, and the National Security Adviser's office. This adds 4-8 weeks to the timeline. The committee evaluates geopolitical implications, treaty obligations, and regional stability considerations.

Once all clearances are in place, DGFT issues the export authorization specifying the items, quantities, value, destination, end-user, validity period (typically 12-24 months), and any conditions. The authorization is item-specific and destination-specific. You cannot divert the shipment to a different country or end-user without a fresh authorization.

File your shipping bill on ICEGATE with the DGFT export authorization number. Customs will verify the authorization against the goods being exported. Defence items may be subject to physical examination by customs officers with defence domain expertise. Ensure your shipping bill correctly references the SCOMET category and authorization details.

Timeline Summary

Defence Export Promotion Policy

The government has introduced several policy instruments specifically designed to promote defence exports. These go beyond the standard export incentive schemes available to all exporters.

Open General Export Licence (OGEL)

OGEL allows pre-approved exporters to ship certain categories of defence items to specified friendly nations without obtaining per-shipment authorization. Once granted, the OGEL is valid for multiple shipments over its validity period (typically 2-3 years). This dramatically reduces the export cycle time for repeat business. Eligibility requires a track record of defence exports, clean compliance history, and adequate internal compliance systems.

Positive Indigenization Lists

The Ministry of Defence has published multiple positive indigenization lists totalling 509 items (across five lists) that cannot be imported and must be sourced from Indian industry. Of these, 117 items have been specifically identified as having export potential. For Indian manufacturers, these lists create guaranteed domestic demand that underwrites the investment needed to build export-quality production capacity. Once you are manufacturing for the Indian armed forces, exporting to friendly nations becomes commercially viable.

Defence Offsets Policy

Foreign OEMs winning defence contracts with India above Rs 2,000 crore must discharge a 30% offset obligation by sourcing from Indian industry. This creates a pipeline of subcontracting work for Indian companies, builds their capabilities and certifications, and positions them for direct exports. Companies that build offset partnerships with foreign OEMs often transition to Tier-1 suppliers for global programmes. More on this in Section 9.

iDEX. Innovations for Defence Excellence

iDEX is the defence ministry's innovation platform for startups and MSMEs. It provides grants of up to Rs 1.5 crore for prototype development, access to defence testing facilities, and a procurement commitment from the armed forces for successful innovations. Products developed under iDEX can be exported once they clear the standard authorization process. Several iDEX graduates have already begun exporting drone components, counter-drone systems, and AI-based surveillance solutions.

Defence Production Corridors

Two Defence Industrial Corridors (in Tamil Nadu (Chennai-Hosur-Salem- Coimbatore-Tiruchirappalli) and Uttar Pradesh (Agra-Aligarh-Lucknow-Kanpur- Jhansi-Chitrakoot)) offer infrastructure support, land at concessional rates, plug-and-play facilities, and single-window clearances for defence manufacturers. Both corridors have attracted cumulative investments exceeding Rs 15,000 crore and are designed to create export-oriented manufacturing clusters.

SRIJAN Portal

The SRIJAN (Self-Reliance through Joint Action) portal lists over 35,000 defence items currently being imported by Defence PSUs and the armed forces, along with their specifications and import values. Indian manufacturers can identify items they can indigenize, apply to become approved vendors, and use the domestic orders as a springboard for export markets. The portal is a practical starting point for MSMEs looking to enter the defence supply chain.

Benefits & Incentives for Defence Exporters

Defence exporters can access a range of financial and non-financial incentives, some specific to defence and others available to all exporters.

Defence-Specific Benefits

• Line of Credit (LOC) from MEA. India extends government-backed Lines of Credit to friendly nations for defence purchases. This means the buyer's government gets concessional financing while the Indian exporter gets paid by EXIM Bank of India. LOCs have been extended to countries in Southeast Asia, Africa, and Central Asia.
• Defence Attaché support. India has Defence Attachés in 60+ countries who actively promote Indian defence products, facilitate government-to-government introductions, and assist with buyer verification. They are your first point of contact in a new market.
• DefExpo and Aero India. These biennial government-supported trade shows provide subsidized exhibition space, B2B matchmaking, and buyer delegations from over 70 countries. DefExpo 2025 in Goa attracted 1,300+ exhibitors and delegations from 100 countries.
• 100% FDI in defence. Up to 74% FDI is permitted under the automatic route, and above 74% through the government route for projects involving modern technology. This allows JVs with foreign OEMs structured specifically for export markets.

General Export Incentives Applicable to Defence

• RoDTEP. Available on non-SCOMET defence items such as body armour, helmets, and communication equipment. Rates vary by tariff line. Check your specific rate using the RoDTEP calculator and see our RoDTEP claim process guide.
• EPCG Scheme. Import capital goods (CNC machines, testing equipment, special tooling) at zero duty against an export obligation of 6x the duty saved, to be fulfilled over 6 years. Ideal for setting up defence manufacturing lines. See our EPCG obligation tracking guide.
• Advance Authorization. Import raw materials, components, and consumables duty-free against specific export orders. Particularly useful for defence items with imported sub-components (alloys, electronics, optics). See our Advance Authorization guide.
• Deemed export benefits. If you supply components to a Defence PSU (like HAL or BEL) that incorporates them into a final product for export, your supply may qualify as a deemed export, entitling you to duty refunds and Advance Authorization benefits even though the goods did not physically leave India from your factory.

International Treaties & Compliance

India's defence exports must comply with its obligations under international export control regimes. Membership in these regimes enhances India's credibility as a responsible exporter but also imposes due-diligence obligations.

ITAR. US International Traffic in Arms Regulations

If your defence product contains any US-origin components, technology, or technical data controlled under the US ITAR (administered by the Directorate of Defence Trade Controls, US State Department), you cannot re-export without US government authorization. This is a common trap for Indian manufacturers who source avionics, sensors, or software from US suppliers. Before incorporating any US-origin content into an export product, verify whether it is ITAR-controlled and obtain the necessary DSP-5 export licence or TAA/MLA from the US. ITAR compliance requires a separate tracking system for US-origin items.

EAR. US Export Administration Regulations

Items not controlled under ITAR but still subject to US export controls fall under the EAR (administered by BIS, US Commerce Department). This covers many dual-use items including high-performance computing, encryption technology, and certain sensors. Re-export of EAR-controlled items requires a licence from BIS unless an exception applies. Indian companies integrating US commercial-off-the- shelf (COTS) components must check EAR classification (ECCN) before exporting the integrated product.

EU Common Position on Arms Exports

EU member states follow the EU Common Position (Council Common Position 2008/944/CFSP) which establishes eight criteria for assessing arms export licence applications, including human rights, regional stability, and end-use considerations. Indian companies seeking to export defence items containing EU-origin technology or components must comply with the originating EU member state's re-export requirements. Additionally, Indian companies bidding for EU military contracts must meet these criteria.

Key Defence PSUs & Private Players

India's defence export ecosystem comprises government-owned Defence Public Sector Undertakings (DPSUs), large private-sector defence companies, and a growing base of MSMEs and startups. Understanding who the primes are helps identify subcontracting and partnership opportunities.

Defence Public Sector Undertakings (DPSUs)

Key Private Sector Players

How MSMEs Can Enter the Defence Supply Chain

MSMEs are the backbone of defence manufacturing globally, and India is no exception. Here is how to get started:

• Register on SRIJAN portal. Browse the 35,000+ items open for indigenization and identify items matching your manufacturing capability.
• Get vendor-registered with DPSUs. Each DPSU has a vendor registration process. Start with BEL and HAL, which have the largest subcontractor base.
• Apply for iDEX grants. If you have an innovative product or solution, iDEX challenges are open to startups and MSMEs.
• Locate in a Defence Corridor. The Tamil Nadu and UP corridors offer infrastructure, incentives, and proximity to anchor units.
• Leverage MSME export schemes. See our MSME export benefits guide for interest subvention, credit-linked capital subsidy, and market access support available to small defence manufacturers.

Offset Obligations & Opportunities

Defence offsets are one of the most powerful but least understood mechanisms for building India's defence export capability. Every large foreign defence contract with India creates mandatory work for Indian industry.

How Offsets Work

Under the Defence Offset Guidelines (part of DAP 2020), foreign OEMs winning Indian defence contracts valued above Rs 2,000 crore must discharge a 30% offset obligation. This means 30% of the contract value must flow back to Indian industry through one or more of these avenues:

• Direct purchase of eligible products or services from Indian defence enterprises
• FDI in Indian defence manufacturing joint ventures
• Technology transfer to Indian entities for defence production
• Investment in defence R&D at DRDO labs, academic institutions, or iDEX startups

Offset Banking and Multipliers

Foreign OEMs can "bank" offset credits by placing work with Indian companies in advance of winning a contract. The Defence Offset Management Wing (DOMW) maintains a ledger of offset credits. Certain categories of offsets attract multipliers: technology transfer for ToT-restricted items gets a 2x multiplier, investment in MSME defence companies gets a 1.5x multiplier, and work placed in Defence Industrial Corridors gets a 1.5x multiplier. These multipliers make it more attractive for foreign OEMs to partner with Indian MSMEs in the corridors.

Civil Aerospace Crossover

Offset obligations from civil aerospace procurement (Air India, IndiGo fleet orders) sometimes overlap with defence offsets when the OEM (Boeing, Airbus) has both defence and civil divisions. Indian companies that build capability through civil aerospace offsets (aerostructures, MRO, avionics) can leverage that capability for defence export orders. Tata Advanced Systems' C-130J empennage work for Lockheed Martin is a prime example of this crossover.

Country-Specific Defence Export Rules

The regulatory environment varies significantly by destination. Indian exporters must comply with both Indian export controls and the importing country's import regulations.

Penalties for Non-Compliance

Defence export violations carry some of the most severe penalties in Indian law. The consequences extend beyond financial penalties to criminal prosecution and international sanctions.

Arms Act 1959 Violations

• Unauthorized manufacture, sale, or export of arms and ammunition: 7 years to life imprisonment plus fine
• Possession of unauthorized arms: up to 7 years imprisonment
• Contravention of licence conditions: cancellation of licence, up to 3 years imprisonment

SCOMET / FTDR Act Violations

• Export of SCOMET items without authorization: penalty up to 5x the value of goods or Rs 10 lakh, whichever is higher
• Suspension or cancellation of IEC (Import Export Code), effectively barring all trade
• Possible prosecution under the Weapons of Mass Destruction Act 2005 for WMD-related items

FEMA and International Consequences

• Unauthorized defence transactions may trigger FEMA violations if foreign exchange is received without proper documentation. See our common FEMA violations guide
• Violation of international sanctions (UN Security Council resolutions, US OFAC SDN list) can result in entity listing, freezing of global banking relationships, and debarment from international defence programmes
• ITAR violations (re-export of US-origin defence items without authorization) can result in US criminal penalties, civil fines up to .3 million per violation, and debarment from all US defence trade

Frequently Asked Questions

Do I need an industrial licence to export defence items from India?

Yes, if you manufacture defence items. You must obtain an Industrial Licence from DPIIT under the Industries (Development and Regulation) Act 1951 before manufacturing any arms, ammunition, or defence equipment listed in Schedule V. If you are a trading company exporting items manufactured by a licensed entity, you still need the DGFT SCOMET export authorization and a No Objection Certificate from the Department of Defence Production, but the industrial licence obligation falls on the manufacturer.

What is the SCOMET list and how does it apply to defence exports?

SCOMET stands for Special Chemicals, Organisms, Materials, Equipment, and Technologies. It is Schedule 2 of the ITC(HS) classification maintained by DGFT. Category 6 (Munitions List) covers conventional arms and military equipment. Any item falling under SCOMET Category 6 requires a specific export authorization from DGFT before it can be exported. Dual-use items in other SCOMET categories (0-5, 7-8) may also require authorization depending on the end-use and destination country. See our SCOMET guide for the full breakdown.

How long does it take to get defence export authorization from DGFT?

The standard processing time is 4-8 weeks for non-sensitive defence items. For sensitive items requiring inter-ministerial consultation involving the Ministry of External Affairs, Ministry of Defence, and the National Security Adviser's office, the timeline extends to 2-4 months. Items covered under the Open General Export Licence (OGEL) scheme can be exported without individual authorization, reducing the timeline to zero for repeat shipments once the OGEL is granted.

What is an End-User Certificate and who issues it?

An End-User Certificate (EUC) is a document issued by the government of the buyer's country confirming the identity of the final user, the intended end-use, and a commitment that the items will not be re-transferred without India's consent. The EUC must be issued by an authorized government agency in the importing country. Typically the Ministry of Defence or equivalent. India's Department of Defence Production requires the EUC as part of the NOC application process.

Can MSMEs participate in defence exports from India?

Yes, and the government actively encourages it. MSMEs can enter the defence supply chain as sub-contractors to DPSUs like HAL and BEL, or to private primes like L&T Defence and Tata Advanced Systems. The iDEX programme funds defence innovation by startups and MSMEs with grants up to Rs 1.5 crore. The SRIJAN portal lists over 35,000 defence items open for indigenization, many suitable for MSME manufacturing. Defence Production Corridors in Tamil Nadu and Uttar Pradesh offer infrastructure and incentive support.

Does India's membership in the Wassenaar Arrangement affect defence exports?

Yes. As a member since 2017, India voluntarily commits to controlling exports of conventional arms and dual-use goods listed in the Wassenaar Arrangement's Munitions List and Dual-Use List. This means DGFT's SCOMET list is aligned with Wassenaar categories, and India must exercise due diligence on end-use and end-users. Membership also benefits Indian exporters by increasing credibility with Western buyers and reducing technology-denial barriers that existed before membership.

What are the penalties for unauthorized defence exports from India?

Penalties are severe. Under the Arms Act 1959, unauthorized manufacture, sale, or export of arms and ammunition carries imprisonment of 7 years to life, plus fines. SCOMET violations under the Foreign Trade (Development and Regulation) Act attract penalties up to 5 times the value of goods or Rs 10 lakh (whichever is higher), suspension or cancellation of IEC, and potential FEMA proceedings. Violation of international sanctions can result in entity listing and loss of export privileges globally.

Is RoDTEP available on defence exports?

RoDTEP is available on defence items that are not controlled under the SCOMET list. For example, non-lethal equipment like body armour, helmets, communication systems, and certain vehicle components that fall outside SCOMET Category 6. Items on the SCOMET list are generally excluded from RoDTEP. However, Advance Authorization and EPCG scheme benefits are available for importing raw materials and capital goods used in defence manufacturing for export, regardless of SCOMET classification.

Related resources

SCOMET Export Controls Guide

Deep dive into India's SCOMET categories, classification, and licensing procedures.

Denied Party Screening

Screen buyers and end-users against UN, US OFAC, EU, and Indian sanctions lists.

Export Compliance Audit Checklist

Build an internal compliance programme for defence and strategic exports.

Update history

• 2026-08-12 First published.