By: Ammar Nainar
The Iran War has already had a severe impact on the United States’ arms and ammunition inventory. The early weeks of the conflict saw the loss or damage to early warning aircrafts, combat jets, and radars. The United States drew into munitions stockpiles reserved for other regions and has possibly depleted its inventory of Tomahawk cruise missiles. Replacing such high-end weapons could take years of production and the United States may not have the ability to mass produce expendable, low-cost weapons. The new demands for arms and munitions come just as India has begun to improve its domestic weapons manufacturing and promote defense exports. In the coming years, this offers opportunities for India and the United States to cooperate in defense manufacturing at scale.
U.S.-India cooperation in defense production is not new. In 1940, an American firm helped establish India’s first aircraft factory in Bengaluru, which by 1964, became the Hindustan Aeronautics Limited (HAL), India’s largest state-owned defense company. In 1985, India and the United States explored co-production of jet engines for India’s fighter aircrafts. Yet the turning point came in 2023 with the launch of the U.S.-India Initiative on Critical and Emerging technologies (iCET) and the India-U.S. Defense Accelerator Ecosystem (INDUS-X). INDUS-X enabled collaboration between startups and research institutions to co-develop defense technologies. Indian startups could use American facilities to test their platforms, while American companies supported their Indian counterparts through investments to develop specialized technologies like unmanned systems. Beyond INDUS-X, various American manufacturers have entered co-production arrangements with select Indian companies. Today, India produces components for U.S. military platforms like fuselage for Boeing’s AH-64 Apache helicopters, fixed wings for Lockheed Martin’s C-130J and F-16 aircrafts, and landing gears for General Atomics’ MQ-9 drones. The U.S. Navy is also working with Indian shipyards on maintenance and repair. The United States is India’s largest defense export destination, accounting for almost 50% of its exports.
Going forward, India’s defense industry could also be critical to U.S. defense production efforts. Currently, India’s defense industrial base comprises of several elements. First, there are 16 public sector companies owned by the Indian government, including manufacturers of ships, small arms, ammunition, aircraft, missiles, and sensors. Second, there are large, diversified private companies such as Larsen and Toubro, Tata Advanced Systems Limited (TASL), the Kalyani Group, Adani Defence and Aerospace, and Mahindra Defence Systems Limited. These private companies have recently entered successful co-production partnerships with South Korean, Israeli, Ukrainian, and British defense firms. Third, small and medium enterprises in India are beginning to produce specialized components, including missiles, loitering munitions, solid propellants, and sensors. Finally, over 78 defense startups were founded in India between 2020 and 2025, with one-third focused on drones and UAVs. Space has emerged as another fertile sector for Indian startups, with companies such as Digantara, Pixxel, GalaxEye, and PierSight Space emerging.
India’s growing defense industry has created more opportunities to contribute to global supply chains. In 2025-26, India recorded more than US$4 billion in exports. Previously, it has exported cruise missiles to Philippines, surface to air missile systems to Armenia, offshore patrol vessels to Vietnam, and ammunition to Saudi Arabia and the United Arab Emirates. Additionally, it has supplied sub-systems, components, and software to the United States, France, and Israel. Indian companies are also undertaking overseas investments and opening facilities. For example, state-owned Mazagon Dock Shipbuilders Limited (MDL) has acquired a controlling stake in Colombo Shipyard in Sri Lanka. Digantara has opened an office in Colorado and offers analytic services to the U.S. Space Force and the U.S. Air Force. TASL has inaugurated a factory in Morocco to provide armored vehicles to its army.
Overall, India’s growing defense industrial sector offers newer opportunities to partner in co-production with American and other international counterparts. Yet for co-production to materialize and grow rapidly, both countries need to address persistent issues such as export controls, procurement policies, and regulatory uncertainty. Despite INDUS-X and various exhibitions, U.S. companies still find it difficult to discover potential Indian partners for co-production. India meanwhile has high expectations for technology transfer, which sometimes do not fructify due to “intrusive” end-user agreements. The conclusion of a Reciprocal Defense Procurement Agreement may help streamline defense trade and foster more linkages between each other’s industrial bases. In the long run, this can help U.S. companies optimize faster and scale production at a lower cost while India can strengthen domestic manufacturing and obtain more favorable terms for investment and technology.
Ammar Nainar is a Program Coordinator and Junior Fellow for the Foreign Policy & Security program at ORF America.