India has long aimed to establish itself as a key player in the global arms market, formalized by the ‘Made in India’ drive for defense self-sufficiency officially launched in 2014. Although its defense exports, ranging from body armor and avionic components to cruise missiles, have increased by 34-fold in absolute terms since then, India has yet to match the export reach of many of the mid-tier suppliers in the global arms market. According to SIPRI estimates, countries such as Iran, Ukraine, the United Arab Emirates (UAE), Jordan, Czechia, Brazil, and South Africa, with shares between 0.3% and 0.4%, all outpace India.
Following the May 2025 Operation Sindoor, this ambition has picked up momentum, as Indian officials claim that India’s now ‘war-tested’ indigenous defense systems are better positioned to attract foreign buyers. Reports also claim that after the operation, the BrahMos supersonic cruise missile system, jointly developed by India and Russia, drew interest from at least 15 countries from Asia to South America.
Yet India’s takeoff as a defense exporter now faces a major new risk, as drastic shifts in US policy introduce new challenges in an already competitive global arms market.
The Trump administration has issued an executive order imposing a 25 percent tariff on goods from India, effective from August 27, as a penalty for importing Russian oil and military equipment. This is in addition to the previously imposed 25 percent tariff in response to the country’s high monetary and non-monetary trade barriers and participation in the BRICS—a group Trump called ‘anti-the United States.’ Beyond these overriding justifications, the policy shift could also be an indirect response to New Delhi’s repeated dismissal of US mediation efforts in the ceasefire deal between India and Pakistan in May.
While the U.S. is not among the primary buyers for Indian-made finished weapon systems, and tariffs do not directly target weapon sales, they do reflect broader diplomatic friction that risks spill over into other areas of cooperation.
One example of Washington’s leverage over the Indian defense ecosystem lies in the industrial partnerships and supplier agreements, supporting domestic defense indigenization drive—the backbone of its arms export ambition. Boeing’s partnership with Hindustan Aeronautics Limited (HAL) for the production of the AH-64E Apache and CH-47F Chinook helicopters in India, or GE Aerospace’s supplies of engines for the Tejas platform, are notable examples.
Such partnerships and arrangements remain dependent on regulatory clearances from Washington under export control laws, such as the International Traffic in Arms Regulations (ITAR), which govern the transfer of defense components, technology, and technical data to foreign partners. Reports suggest that cooperation between Washington and New Delhi on space launch technologies and unmanned aerial combat systems in the past have been delayed or derailed entirely due to these laws.
If unresolved, the present diplomatic rift could slow permits and clearances for defense projects and component supplies, prolonging the manufacturing timelines of several Indian weapon platforms, including Tejas fighter jets, which India is actively seeking to export in the global market. Slow engine supplies by GE Aerospace earlier have already been associated with delays in India’s fighter jet production. As a result, HAL has struggled to meet delivery timelines for even domestic Tejas aircraft orders, potentially raising concerns among foreign buyers. While New Delhi has recently announced a plan to work with a French company to develop and manufacture fighter jet engines domestically, this may not serve as an immediate replacement for existing US engine supplies.
Beyond influencing domestic manufacturing, these export control laws also determine whether systems incorporating US components can be exported to global markets. There is a risk of potential delays in export authorization if New Delhi reconsiders the procurement of aircraft and weapons from the U.S. Indian officials have denied plans of any such reconsideration, yet the emergence of these claims in foreign media, citing Indian officials, suggests that the matter could possibly be under review.
Another lever Washington holds is the US federal law CAATSA (Countering America’s Adversaries Through Sanctions Act), which allows secondary sanctions on entities transacting with sanctioned parties, including Iran, Russia, and North Korea, influencing the export potential of Russia-linked projects, notably the BrahMos missile system. New Delhi has to date secured a BrahMos export deal from only the Philippines, despite advanced talks with multiple nations, such as Vietnam, Indonesia, the UAE, Argentina, Brazil, and South Africa. Fears of CAATSA sanctions have been among the key obstacles, and the recent penalty on New Delhi over Russian arms purchases risks increasing buyer reluctance toward Russia-linked projects.
Even for systems unrelated to Russia, friction with the US can deter potential customers from choosing Indian platforms, especially when multiple alternative suppliers are available.
For New Delhi, the challenge of securing a place in a saturated global arms market became evident well before the present crisis. For instance, despite New Delhi’s proposal to adapt Tejas to Argentinian requirements, Buenos Aires opted for the US-supplied F-16 in 2024, winning out over both China and India. More recently, the Brazilian government cancelled a deal for the purchase of India’s Akash surface-to-air missile system in favor of the NATO-proven Enhanced Modular Air Defense Solutions System (EMADS). Should the present political climate persist, it risks increasing the likelihood of such an outcome. The same may also apply to potential co-production or co-development arrangements.
India’s Foreign Minister has confirmed that talks with the U.S. are still ongoing. Analysts, however, are careful about raising high hopes, given the diversity of underlying motivations driving the rift and the Modi government’s assertion that it will take ‘all actions necessary’ to protect its national interests. From the standpoint of defense exports, this may remain the most unfavorable scenario for all the reasons stated above. In a second scenario or a middle path, even if the current diplomatic friction eases, Russian-linked projects may continue to face buyer resistance or New Delhi, as a condition, may have to reduce reliance on defense partnerships with Russia gradually. The best-case scenario would be a thaw in US-India ties and a softer US stance on Russia, should there be progress on a Ukraine ceasefire, boosting markets and easing New Delhi’s supply chains. The future thus hinges on the outcomes of geopolitical conflicts just as much as it does on New Delhi’s ability to balance alliances and interests.
