Two important developments were noteworthy in the last fortnight. First, India’s defence exports touched INR 23,622 Crores (approximately USD 2.7 billion) in FY 2024-25, marking an impressive 12% growth. Second, there was a major escalation with Pakistan in which, inter alia, domestically produced Indian weapon systems performed exceptionally well. Both developments, in their own unique ways, put the focus back on defence industrial production and its global linkages. Wars have always been—and will continue to be—won by industrial capacity.
As India moves towards becoming a global defence manufacturing hub, the proposed Reciprocal Defence Procurement (RDP) Agreement with the United States emerges as a pivotal opportunity. With the Ministry of Defence declaring 2025 as the Year of Reforms, the timing could not be more opportune. From a largely Soviet inventory about two decades back, there is a discernible westward shift, and Indian armed forces are currently using at least eight major U.S.-designed or produced platforms. The RDP Agreement, alongside India-U.S. initiatives—such as the Security of Supplies Arrangement (SOSA), and the Initiative on Critical and Emerging Technology (iCET), and now Transforming the Relationship Utilising Strategic Technologies (TRUST)—signal further deepening of India-US defence ties.
A defence trade-focused agreement assumes added significance as India and the U.S. prepare to conclude a new 10-year defence framework for 2025–2035, designed to enhance defence industrial collaboration and provide policy framework for closer defence ties. There are already indications of improved policy and regulatory alignment between the two countries in the defence domain. As reflected in the Joint Statement issued by the Prime Minister and the U.S. President on 13 February 2025, the leaders have pledged to reassess arms transfer regulations, including the International Traffic in Arms Regulations (ITAR). Furthermore, India’s status as a Strategic Trade Authorisation 1 partner and active participation in the QUAD strengthen its standing in deepening defence cooperation with the U.S.
The U.S. is one of India’s top three destinations for defence exports. The RDP Agreement has the potential to elevate these exports from components to complete systems if leveraged effectively.
