UK defence a key partner for Viksit Bharat 2047

As democracies committed to a rules-based international order, the United Kingdom (UK) and India share common values and security interests, making us natural partners in defence. This is evident in the joint military exercises our forces undertake.

But why, I’m often asked, do we not see the same level of partnership in defence manufacturing? Why does the UK, with 7% of the global arms export market, only hold a 2.5% share in India? At the same time, why doesn’t India export more into the UK defence sector?

The reality is that the UK has underperformed in India’s defence manufacturing sector for many years. However, this is rapidly changing through a revitalised, strategic approach from both governments.

In 2015, a Defence and International Security Partnership (DISP) was established. This was followed by a 2019 Memorandum of Understanding (MoU) on Defence Technology and Industrial Capacity Cooperation (DTICC) and, in 2021, a 2030 roadmap which positioned defence as one of five key pillars in the relationship. In 2022, the UK took the important step of adding India to countries eligible for Open General Export License (OGEL), to facilitate the export of niche and dual-use tech to India. Earlier this year, India’s defence minister visited the UK, resulting in a Letter of Arrangement (LoA) between India’s DRDO and the UK’s DSTL to boost technology collaboration.

Two months ago, the UK’s foreign secretary announced in New Delhi the UK-India Technology Security Initiative (TSI), introducing a new approach for bilateral cooperation in critical technologies such as Artificial Intelligence (AI), quantum, and semiconductors. This initiative, while not expressly defence-related, complements broader defence efforts.

A delegation of UK defence companies recently visited New Delhi to engage with the Indian government and industry, participating in events like the UK-India Industry Day. The momentum is clearly building.

Why? Because the potential for bilateral collaboration has never been greater.

India is focused on indigenisation, building reliable defence technology supply chains, and providing its forces with the capabilities needed for modernisation. The country is progressing rapidly in developing its domestic defence industry. The UK-Indian Business Council (UKIBC) and its members appreciate India’s Atmanirbhar Bharat initiative and applaud reforms in the defence sector. We recognise India’s focus on co-creation, co-development, and manufacturing for global markets.

India is not simply a market. UK companies are starting to see India as a strategic partner, integrated into their research, technology, and supply chains. UK firms stand to benefit from India’s cost-effective manufacturing, while India can accelerate its industrial development with support from mature defence markets like the UK.

Ultimately, this partnership is about equipping India’s armed and paramilitary forces with the tools they need. A secure India leads to a more secure Asia-Pacific region, which is a key UK interest.

Returning to the question: Why hasn’t UK defence manufacturing grown more in India? A survey was recently released showing the UK's contributions to India’s defence sector, revealing extensive business-to-business activity. UK firms may be too modest about their impact, or we might need to tell our story better. British technology is integrated into many defence platforms, as in the HAL-Tejas which contains critical systems from the likes of Meggitt and Martin-Baker.

The Implementation Agreement (IA) between Rolls Royce and GTRE to co-develop a new engine to power future Indian fighters augurs well for British involvement in major Indian platforms.

At UKIBC, our aerospace & defence industry group includes over 20 UK companies with combined global revenues of $60 billion, all keen to expand their business with India. UK firms are working with Indian partners on future programmes like electric propulsion, indigenous aero engine design and complex weapons.

Still, we’re only scratching the surface. Both governments and businesses need to seize the opportunity. In the UK, export control regulations do not always align with our trading goals. Where possible, the UK should ensure its export licensing rules enable the government’s ambitions for a robust defence manufacturing and technology partnership with India.

In India, adjustments to the Defence Acquisition Procedure (DAP) 2020 could substantially increase Foreign Direct Investment (FDI) and job creation. This would also enhance indigenous capability by bringing foreign technology into domestic programmes, boost the Strategic Partnership Model, and help India close the capability gap with China faster. For example, refining the grading of indigenous content and addressing FDI inconsistencies between procurement programmes would help ensure a level playing field for foreign and Indian firms, encouraging more foreign companies to manufacture in India for global markets, as they do in other sectors.

Despite geopolitical challenges, global defence firms are thriving worldwide, and while India’s defence market isn’t yet ‘plug and play’ for international majors, significant progress has been made. Still, our members want both governments to be bolder in their approach.

We need a plan to connect India’s flourishing defence start-up ecosystem with the UK. Establishing an accelerator programme for high-growth UK firms in India could drive more tech collaboration and joint ventures. At the same time, India could consider allowing 100% automatic FDI in defence, with national security exclusions and contract clauses to ensure supply during conflicts. We should explore a UK-India UAV programme to reduce reliance on Chinese components. The UK could sponsor more chairs at Indian think tanks to deepen understanding of India’s defence ecosystem. Additionally, we should explore ways for the UK and India to jointly provide defence equipment to third markets in the region.

UK firms are already active across India’s defence market, but we must communicate this more effectively. Even so, there is much more the two countries can do together, enabled by the right reforms on both sides, to secure a bright future in defence manufacturing.

This article is authored by Richard McCallum, Group CEO, UK-India Business Council.