India’s defence industry is increasingly finding a market in Europe as the continent steps up military spending amid the Russia-Ukraine conflict and changing US security commitments, according to Kotak Institutional Equities. From artillery shells and ammunition to aerospace components, defence electronics and software, Indian companies are beginning to participate in Europe’s evolving defence supply chain.
According to Kotak’s “Aerospace & Defense – India” report, Europe is emerging as an important destination for Indian defence exports. Indian companies including Reliance Defence Limited, Tata Advanced Systems, Bharat Forge and Mahindra Defence have also entered partnerships with European defence majors such as Dassault, Airbus and Rheinmetall. The developments span multiple segments, including artillery ammunition, C295 transport aircraft and jet-engine technology.
Czech Republic, France among early European buyers
India’s defence exports to European markets are already extending beyond partnerships and joint ventures. In 2023, the Czech Republic procured Indian ammunition from Munitions India Limited (MIL), including 80,000 rounds of 120mm mortar ammunition and 50,000 rounds of 125mm tank shells, according to Kotak Institutional Equities report.
In 2024, France received India’s first-ever export of 100,000 155mm M107 artillery shells from an Ordnance Factory. The European country, which is home to Dassalt, the maker of Rafale jets, emerged as another important market for Indian defence technology. Kotak said France was the top buyer of Indian defence technology through offsets, with Indian companies supplying areas including embedded software, simulators and electronics.
These transactions indicate that India’s relationship with European defence markets is not limited to supplying finished equipment. Indian companies are also participating in technology and component supply chains.
European partnerships have been building for years
The growing European opportunity has roots in India’s earlier defence procurement partnerships with European original equipment manufacturers. One example is the 2016 Rafale fighter jet programme involving Dassault Aviation and MBDA. The Dassault Reliance joint venture in Nagpur manufactures components for the Rafale and Falcon 2000 programmes, while around 30 Indian MSMEs are also involved, according to Kotak.
Another partnership dates to India’s procurement of M777 Ultra-Light Howitzers from BAE Systems. Mahindra-BAE Systems’ Advanced Integration and Testing facility has assembled more than 120 gun kits locally and facilitated the transfer of artillery manufacturing know-how, Kotak said.
These partnerships have created domestic manufacturing capabilities that could potentially support India’s participation in European defence supply chains.
How India’s procurement policy created the manufacturing base
Kotak also points to India’s Defence Acquisition Procedure 2020, particularly the Buy (Global – Manufacture in India) category. Under this framework, contracts are entered into with foreign original equipment manufacturers while requiring substantial portions of the equipment to be manufactured domestically. The category mandates a minimum 50% indigenous content, according to the report.
The Airbus C295 and Predator MQ-9B programmes are among the deals cited by Kotak under this procurement category.
Such arrangements have helped bring global defence manufacturers into India while simultaneously building local manufacturing and supply capabilities.
Artillery and ammunition could be an early export opportunity
Kotak identifies ammunition and missiles as one of the areas where Indian companies could expand their presence in European markets. Indian artillery-shell exports to Europe are already underway, while domestic manufacturers have developed capabilities for producing ammunition to international standards.
The report identifies Ordnance Factory and Solar Industries among potential suppliers in the ammunition segment.
Missiles could represent another opportunity. Kotak notes interest from Greece in BrahMos, while the Akash surface-to-air missile system has gained traction following India’s order from Armenia.
Aerospace could become another major link
India’s growing aerospace manufacturing ecosystem could also provide a route into European defence supply chains. Kotak identifies companies including Tata Advanced Systems (TASL), Dynamatic Technologies, HAL and BEL as potential beneficiaries in aircraft components.
Indian companies already supply components to Airbus programmes, while the Tata-Airbus C295 joint venture and the development of a Dassault maintenance, repair and overhaul (MRO) facility in Uttar Pradesh could further expand India’s aerospace capabilities.
The combination of existing supplier relationships and new manufacturing facilities could allow Indian companies to participate more deeply in European aerospace programmes.
UAV demand could create another export avenue
The report also identifies unmanned aerial vehicles (UAVs) as a potential area of growth. With European defence requirements increasing for surveillance and loitering drones amid the ongoing conflict, Kotak identifies Adani and Solar Industries among Indian companies positioned in the UAV segment.
The opportunity is linked to the massive expansion of drone and counter-drone capabilities as European countries reassess their defence requirements.
Jet engines could be a longer-term opportunity
Another potential area is advanced propulsion technology. Kotak points to HAL’s cooperation with Safran on engine development for the Advanced Medium Combat Aircraft (AMCA).
The development of indigenous capabilities in military aircraft engines could potentially provide Indian industry with a pathway into wider international and European combat-aircraft supply chains. This would represent a more technologically complex opportunity compared with conventional component manufacturing.
Defence electronics and software
India’s defence electronics industry could also find opportunities in Europe. Kotak identifies BEL in areas such as radar, sensors and communications. Its joint venture with Thales is developing radar technologies with potential applications in global markets, including Europe.
The report also identifies Indian electronics manufacturing services companies as potential suppliers, noting India’s existing capabilities in areas such as electro-optical sights and night-vision equipment.
From offsets to exports
The emerging European opportunity shows a shift in India’s defence-industrial relationship with foreign manufacturers. Earlier procurement agreements were structured partly around localisation and offset requirements. Those arrangements helped create manufacturing capabilities and supplier relationships inside India.
The companies that emerged from those relationships are now positioned to pursue something different: supplying the global defence market directly.
The Czech ammunition orders and French purchases of Indian defence technology offer examples of this transition, while the partnerships with Dassault, Airbus and BAE Systems demonstrate how procurement-linked manufacturing has created a broader industrial base.