India offers cheap loans for arms, targeting Russia's traditional customers

Highlights:

• India plans to expand cheap loans, including to countries with higher political or credit risks
• Delhi sending more defense attachés abroad to help sell arms
• Ukraine invasion's after-effects pushed some countries to consider Indian arms
• Lack of track record selling higher-end wares has delayed some potential deals

Prime Minister Narendra Modi's bid to transform India into a global factory floor has produced billions of dollars of low-cost iPhones and pharmaceuticals. Now he hopes to add missiles, helicopters and battleships to the shopping carts of foreign governments.

The world's largest importer of weapons after Ukraine is expanding the ability of the state-owned Export-Import Bank (EXIM) to offer long-term, low-cost loans to clients, including those whose political or credit risk profiles may limit their access to conventional financing, according to two Indian officials and three industry sources.

New Delhi will also sharply increase the number of defense attachés in its foreign missions as part of a new program that will see the government directly negotiate some arms deals, four Indian officials said. India is particularly targeting governments which have long relied on Russia for arms, two of the people said.

India's plans, which were detailed to Reuters by 15 people and have not been previously reported, mark an unprecedented effort by the government to inject itself into the recruitment and financing of foreign buyers as the world is rearming and longstanding geopolitical relationships are being recast.

Indian bureaucrats have long focused more on buying fighter aircraft from Russia's Sukhoi and howitzers from the United States to ward off China and Pakistan, Delhi's two nuclear-armed neighbors. While India has long had a small-arms production sector, its private firms have only recently started to make higher-end munitions and equipment.

The Indian defense and external affairs ministries, as well as Modi's office, did not respond to requests for comment. EXIM declined to comment.

"India is marching towards achieving the target of increasing defence exports," defense minister Rajnath Singh wrote on X this month.

One turning point was Russia's invasion of Ukraine in February 2022, according to an Indian official tasked with growing arms exports. Like most of the people interviewed by Reuters for this story, the official spoke on condition of anonymity to discuss sensitive government matters.

Spare Western arsenals were shipped to Kyiv while Russia's factories churned out munitions almost exclusively for its war effort. That left other nations that had historically relied on Washington and Moscow - the world's two largest arms exporters - scrambling for alternatives.

With its history of buying and absorbing arms technology from both the West and Russia, Delhi started to get more inquiries, the official said.

In response to Reuters' questions, Russian state arms exporter Rosoboronexport referred to previously issued statements that said it was in talks with India about jointly producing and promoting equipment to third-party states that are "friendly to Russia."

The Pentagon had no comment.

India produced $14.8 billion of arms in 2023-2024 fiscal year, up 62% since 2020, government data show. Some Indian-made artillery shells were found on the frontline in Ukraine in support of Kyiv's defense, Reuters previously reported.

Delhi has started brokering meetings between visiting delegations and domestic arms contractors, as well as demonstrating more sophisticated equipment like combat helicopters during military exercises, four officials said.

Viraj Solanki, a research fellow at London's International Institute for Strategic Studies think-tank, said India faced challenges selling its newer and more high-end wares.

"Unless it starts using its indigenous equipment more frequently and demonstrating its effectiveness, it is likely to struggle to convince potential buyers," he said.

STRATEGIC AUTONOMY

Delhi is focusing its arms-export strategy on countries in Africa, South America and Southeast Asia.

India plans to dispatch at least 20 new defense attachés to foreign embassies by March 2026, three Indian defense officials said. Their host nations include Algeria, Morocco, Guyana, Tanzania, Argentina, Ethiopia, and Cambodia, they said, adding that Delhi believed it had the ability to significantly expand arms exports to those governments.

One of the officials said this would be accompanied by a reduction in the number of defense attachés posted to Western embassies, who would be sent elsewhere.

The attachés have been tasked with promoting Indian weapons and were given resources to analyze the arms requirements of their host governments, the officials said.

Like India, many of these nations have a history of buying military equipment from the Soviet Union and Russia, which differs from the NATO standards adopted by many Western producers.

One early success story is Armenia, where India posted a defense attaché for the first time last year.

India has already eroded Russia's monopoly over arming Armenia, which was part of the Soviet Union but has since said that it cannot rely on Moscow.

It sold 43% of the arms Armenia imported between 2022 and 2024, according to data from the Stockholm International Peace Research Institute, up from almost nothing between 2016 and 2018.

Rosoboronexport said in March that SIPRI, which relies on open-source information, does not have comprehensive data.