• Defence exports reached ₹23,622 crore in FY25, with products shipped to over 80 countries—MSMEs are key suppliers in these value chains. 

• Simplified export procedures and digital systems are reducing time and compliance costs for small defence exporters. 

• EPM’s Niryat Protsahan and Disha schemes offer financial and training support tailored to export readiness.

• Inclusion of defence and SCOMET items in the positive list opens high-value global markets for dual-use and controlled goods.

• MSMEs participating in R&D under iDEX and TDF can scale from innovation to exports through structured co-development pipelines.

With India’s defence exports recording an all-time high of ₹23,622 crore in FY 2024–25—a 12.04% increase over the previous year¹, the country has consolidated its position as a strong player in the global defence supply chain. Defence products are now being exported to around 80 countries, reflecting growing confidence in Indian-origin systems, subsystems, and components. This comes at a time when the domestic defence industry is also seeing robust growth. The domestic market is projected to expand from US$30.52 billion in 2025 to nearly US$37 billion by 2030, driven by higher capital allocations and a defence budget of ₹6.81 lakh crore in FY26². Furthermore, India’s emphasis on self-reliance through the Make in India and Atmanirbhar Bharat initiatives has resulted into record domestic production as well, crossing ₹1.54 lakh crore in FY24–25. With the defence export target set at US$5.8 billion by 2030³, MSMEs stand to play a pivotal role in scaling and sustaining this momentum.  

How the Export Ecosystem is Changing for MSMEs 

For MSMEs looking to participate in defence exports, one of the biggest enablers has been the simplification of procedures. Standard Operating Procedures for Munitions List items have been rationalised, reducing delays and improving compliance clarity. Export authorisations, previously slowed down by paperwork and manual reviews, are now processed through an end-to-end digital portal that provides real-time tracking and faster turnaround. The introduction of Open General Export Licences (OGELs) has eased the approval process for recurring, non-sensitive exports—allowing eligible MSMEs to complete shipments without seeking individual clearances each time. These measures have collectively reduced friction, making it easier for smaller manufacturers to join global supply chains.  

Besides the above, the recently launched Export Promotion Mission (EPM), along with its two sub-schemes called Niryat Protsahan and Niryat Disha, offers a comprehensive policy framework to help MSMEs participate more actively in strategic exports.  

Niryat Protsahan and Niryat Disha Under EPM 

The ₹25,060 crore EPM was designed to support MSME exporters across all sectors, but its relevance is particularly significant for high-value segments like defense manufacturing. Under this mission, the Niryat Protsahan sub-scheme offers financial assistance for activities such as certification, product adaptation, research and development, and participation in international trade fairs. For MSMEs that have the manufacturing capability but lack market exposure or export-specific readiness, this scheme helps bridge the gap between production and global demand. 

In its initial rollout, Niryat Protsahan has introduced two key financial interventions to improve access to affordable trade finance. The first focuses on interest subvention for pre- and post-shipment export credit. A base subvention rate of 2.75% has been announced to reduce borrowing costs for MSME exporters, with additional incentives for shipments to under-represented or emerging markets. This directly addresses working capital constraints, helping MSMEs manage production and delivery cycles more efficiently. 

This benefit will apply only to exports falling under a notified positive list of tariff lines at the six-digit Harmonised System (HS) code level. The list covers approximately 75% of India’s tariff lines and has been curated using data-driven criteria, including MSME concentration, value addition, and sectoral intensity. An annual interest subvention cap of ₹50 lakh per exporter has been prescribed for FY 2025–26. Defence and Special Chemicals, Organisms, Materials, Equipment and Technologies or SCOMET-notified products have been explicitly included, supporting India’s push for strategic and high-value exports. 

The second intervention under Niryat Protsahan introduces collateral guarantee support in partnership with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). It aims to ease access to export credit for MSMEs that face challenges in providing collateral. Guarantee coverage of up to 85% will be extended to micro and small exporters, and 65% to medium exporters, with a maximum guaranteed exposure of ₹10 crore per exporter in a financial year. This measure is expected to unlock higher levels of bank lending for export-oriented MSMEs, especially in the defence sector. 

Complementing these financial interventions, the Niryat Disha sub-scheme focuses on building the export capacity of MSMEs. Through training programs, export readiness modules, and targeted handholding, the scheme supports enterprises that are new to exports or navigating regulatory complexity for the first time. Together, the two schemes aim to improve the quality, credibility, and market reach of Indian MSMEs in sectors where compliance and product performance are critical. 

Strategic and SCOMET Products in the Positive List 

One of the most consequential developments under EPM is the inclusion of defence and SCOMET-notified items in its positive list. SCOMET items are dual-use products that have both civilian and military applications, and their export is regulated by the Directorate General of Foreign Trade (DGFT). By recognising these as priority categories under EPM, the government has effectively signalled a shift toward promoting high-technology, high-value exports from India. 

This benefits MSMEs engaged in producing precision-engineered components, surveillance systems, specialised materials, electronics, and dual-use equipment. These businesses often face complex regulatory scrutiny, and the positive list inclusion means they now have better access to financial support, capacity-building, and procedural guidance, all of which improve their chances of entering or expanding in global defence markets. 

The Role of MSMEs in Defence Exports 

India’s current defence exports go far beyond large platforms. While systems like the Tejas fighter jet and Dhruv helicopter attract attention, the real volume lies in proven, modular products such as bulletproof jackets, patrol vessels, surveillance radars, lightweight torpedoes, and communications equipment. MSMEs are deeply embedded in these categories, supplying critical subcomponents like antennas, wiring looms, mechanical parts, ruggedized electronics, fasteners, and spares. 

These are often delivered as part of bulk orders or continuous supply contracts, requiring a high degree of consistency and quality assurance. MSMEs that develop core capabilities in such areas, which are backed by certification, export readiness, and structured documentation, can build long-term business pipelines with defence integrators and foreign buyers alike. 

Defence Exports as Long-Term Diplomacy 

Defence exports today function as an extension of strategic diplomacy. Countries importing Indian defense products often receive bundled support in the form of training, maintenance packages, logistics support, and lifecycle upgrades. This ensures interoperability and builds trust, which in turn strengthens long-term relationships between India and partner nations. 

For MSMEs, this presents an opportunity to enter long-duration contracts, including those that require recurring maintenance, upgrades, or replacement parts. The more these businesses integrate with platforms exported with support packages, the better their chances of stable revenue and repeat orders throughout the product life cycle. 

R&D and Co-Development via iDEX and TDF 

Policy and funding mechanisms such as the iDEX (Innovations for Defence Excellence) program and the Technology Development Fund (TDF) have opened new R&D opportunities for MSMEs. These platforms enable small enterprises to co-develop niche technologies and solutions alongside DRDO, the Armed Forces, and Defence Public Sector Undertakings (DPSUs). The support provided ranges from grants for prototype development to structured trials and commercialisation pathways. 

As more of these innovations move past validation and into production, they become part of India’s export-ready inventory. MSMEs that succeed in these programs can scale from being research vendors to commercial suppliers, especially when their products are inducted into systems being exported. 

India’s defence export success is the result of coordinated policy interventions, manufacturing maturity, and increasing global confidence in Indian-origin systems. For MSMEs, this moment represents a critical window to scale operations, meet compliance standards, and build capacity for sustained participation in international markets. With the Export Promotion Mission, Niryat Protsahan, and Niryat Disha creating both financial and procedural support, India’s smaller defence manufacturers are now better positioned than ever to strengthen national self-reliance through strategic exports.