By Pradeep S Mehta, Col Shailender Arya and Anjali Shekhawat
Two important developments were noteworthy in the last fortnight. First, India’s defence exports touched INR 23,622 Crores (approximately USD 2.7 billion) in FY 2024-25, marking an impressive 12% growth. Second, there was a major escalation with Pakistan in which, inter alia, domestically produced Indian weapon systems performed exceptionally well. Both developments, in their own unique ways, put the focus back on defence industrial production and its global linkages. Wars have always been—and will continue to be—won by industrial capacity.
India-U.S. RDP Agreement: A Potential Booster for Indian Defence Exports As India moves towards becoming a global defence manufacturing hub, the proposed Reciprocal Defence Procurement (RDP) Agreement with the United States emerges as a pivotal opportunity. With the Ministry of Defence declaring 2025 as the Year of Reforms, the timing could not be more opportune. From a largely Soviet inventory about two decades back, there is a discernible westward shift, and Indian armed forces are currently using at least eight major U.S.-designed or produced platforms. The RDP Agreement, alongside India-U.S. initiatives—such as the Security of Supplies Arrangement (SOSA), and the Initiative on Critical and Emerging Technology (iCET), and now Transforming the Relationship Utilising Strategic Technologies (TRUST)—signal further deepening of India-US defence ties.
A defence trade-focused agreement assumes added significance as India and the U.S. prepare to conclude a new 10-year defence framework for 2025–2035, designed to enhance defence industrial collaboration and provide policy framework for closer defence ties.
There are already indications of improved policy and regulatory alignment between the two countries in the defence domain. As reflected in the Joint Statement issued by the Prime Minister and the U.S. President on 13 February 2025, the leaders have pledged to reassess arms transfer regulations, including the International Traffic in Arms Regulations (ITAR). Furthermore, India’s status as a Strategic Trade Authorisation 1 partner and active participation in the QUAD strengthen its standing in deepening defence cooperation with the U.S.
The U.S. is one of India's top three destinations for defence exports. The RDP Agreement has the potential to elevate these exports from components to complete systems if leveraged effectively.
The promise of RDP: A leap beyond components and services
The RDP Agreement is more than a bureaucratic handshake; it could be a strategic lever to reshape India’s defence export landscape. Unlike SOSA, which focuses on supply chain resilience, RDPA aims to harmonise procurement frameworks, allowing Indian and U.S. defence sector companies to compete on equal footing. By bypassing certain national policies—like the US’s Buy American Act and India’s Make in India Public Procurement Policy—the agreement creates a level playing field for both sides. Indian firms can bid for U.S. defence contracts as if they were domestic players, and vice versa. Once India signs the RDPA, it becomes a qualifying country under the U.S.’s Defence Federal Acquisition Regulation Supplement (DFARS), a set of unique requirements that the DoD suppliers must adhere to. As U.S. looks to purchase more within its defence budget, Indian companies could supply designs, services, components, subsystems and complete systems at a competitive price which will enable U.S. to optimise its defence budget.
This is a significant development for India, with ambitions to reach a defence export target of INR 50,000 crore by 2029. Currently, India excels in exporting components—like F-16 parts or Chinook subsystems—but struggles to market complete systems. The RDP Agreement could bridge this gap by enabling mutual recognition of certifications and fostering co-production and joint testing. Such steps would lend greater credibility to Indian systems like the Tejas LCA, Prachand LCH, and Akash Air Defence System. For instance, US procurement of Indian systems or their validation through joint India-U.S. RDP Agreement: A Potential Booster for Indian Defence Exports exercises could signal quality to global buyers, similar to how Sweden’s Gripen gained traction after multinational exercises.
The agreement is also in line with India’s broader defence reforms, including the establishment of a dedicated Export Promotion Council (EPC) for the sector. The EPC aims to streamline export processes and enhance India’s image as a reliable defence partner. Pair this with the RDP’s potential to open U.S. markets, and India could transition from a subcontractor to a co-developer of cutting-edge systems like jet engines, maritime surveillance, or counter-drone technologies with the U.S. The recent Anduril-Mahindra partnership for AI-enabled maritime systems is evidence of what’s possible when bilateral ties deepen.
While the RDPA appears to be a logical progression after SOSA, it will take time to finalise. The agreement must navigate complex challenges, including harmonising procurement expectations and addressing implicit trade barriers.
The challenges: Mismatches and structural gaps
While the RDP Agreement promises mutual market access, it is not without difficulties. One major hurdle is aligning India’s Request for Proposals (RFPs) with U.S. procurement expectations. The structure and requirements of Indian RFPs is significantly different from the expectations of U.S. defence companies.
While India’s Ministry of Defence employs traditional contracts under the “Make” Procedure and iDEX scheme for defence innovations and R&D, the U.S. relies on other flexible procurement platforms like ‘Other Transaction Authority’ (OTA), which often bypass traditional procurement rules to include R&D which could not be classified under RDPA, leading to uneven implications. This mismatch could limit the RDP’s scope, particularly for innovative projects under the U.S.’ OTAs.
Moreover, RDPA stipulations might oblige Indian prime contractors—including both Defence PSUs and private companies—to provide non-discriminatory subcontracting opportunities to U.S. entities. However, Indian firms often lack familiarity with the complexities of U.S. procurement law, putting them at a disadvantage compared to their American counterparts.
Conversely, U.S. firms accustomed to navigating the Defence Federal Acquisition Regulation Supplement (DFARS) may find India’s conventional “Make” Procedure restrictive. Another challenge is global acceptance of Indian defence systems. as India is relatively new entrant in the global arms market. Although India exports subsystems to over 100 countries, full-system exports remain limited, hindered by the absence of anchor clients or prior international sales. The RDP Agreement could address this through joint testing or U.S. procurements, but the agreement may lack specific mechanisms to facilitate this. The lack of details on procurement rules may reduce the agreement to being aspirational. For instance, Article 5 of the Australian RDP calls for transparent procedures and expeditious dispute resolution but lacks specificity. Unlike comprehensive trade agreements, RDPs provide only key principles, with limited focus on detailed regulations or proprietary data safeguards.
Implicit trade barriers in the U.S. may complicate matters. Despite exemptions from Buy American restrictions, U.S. legislative measures—like the SECURE Technology Act (2018), the National India-U.S. RDP Agreement: A Potential Booster for Indian Defence Exports Defence Authorisation Act (2019), and policies promoting sustainability, subcontracting preference to SMEs, anti-counterfeiting, cybersecurity measures, and supply chain resilience—collectively indicate a protectionist stance. These subtle protectionist measures could undermine the RDP’s benefits unless India negotiates robust safeguards.
For example, Canada’s RDP with the U.S. includes detailed commitments to fair competition, offering a model for India to emulate.
Finally, the Make-I programme, designed to foster indigenous design and development, has seen slow progress. Foreign direct investment (FDI) in defence, capped at 74% for joint ventures, has attracted limited interest, with no major weapon systems yet manufactured under the Buy (Global-Manufacture in India) category. These gaps suggest the policies may need to be modified to incentivise foreign OEMs and align with the RDP Agreement goals.
Maximising the RDP: A strategic roadmap In FY 2024, the U.S. defence budget was USD 895 billion and is expected to cross USD 1.00 trillion within the year. For Indian companies, the RDP Agreement is important from the perspective of Indian companies towards gaining access to the vast U.S. defence market.
To unlock the RDPA’s full potential, India must adopt a multi-pronged strategy. First, negotiators should prioritise transparency and specificity in the agreement. This means defining clear rules for procurement, dispute resolution, and proprietary data safeguards, drawing inspiration from India-U.S. RDP Agreement: A Potential Booster for Indian Defence Exports Australia and Canada’s RDPs. Including R&D and acquisition services, as the U.S. does with the UK, could also broaden the agreement’s scope, enabling collaboration on next-gen technologies like counter-drone technologies, hypersonics or AI.
Second, India must leverage the RDP to validate its indigenous defence systems. Joint testing with the U.S., similar to NATO’s multinational exercises, could certify platforms like the Akash missile for global markets. Co-production deals, like the GE-HAL jet engine collaboration, could further enhance the credibility of Indian systems.
Last year, Saab, a Sweden-based company, received a 100% Foreign Direct Investment (FDI) approval from the Indian Government and will now produce the Carl-Gustaf M4 recoilless rifles under Saab FFVO India Private Limited in India. The recent India-Slovakia MoU for combat vehicle technologies also demonstrates how targeted partnerships can build export momentum.
Third, while negotiations are ongoing, India must proactively support its defence firms in securing international certifications required in key export markets. This will ensure Indian companies are not constrained by regulatory hurdles when entering Western markets.
Fourth, domestic reforms are crucial. There are various suggestions such as relaxing Make-I funding caps and treating foreign OEMs on par with Indian firms for critical technologies. Identifying programmes like the Multi-Role Fighter Aircraft (MRFA) for the Buy (Global-Manufacture in India) category could attract FDI and boost manufacturing. Public procurement and offset rules should apply in the engagement to ensure transparency, reciprocity, and local value addition. The EPC’s role in simplifying export authorisations and promoting India’s defence brand will be equally vital.
Finally, India should align the RDP Agreement with broader bilateral platforms like TRUST and the Defence Technology and Trade Initiative (DTTI). Prioritising co-development in high-demand areas like drones and counter-drones, missile systems, or MRO facilities, could position India as a global supply chain hub. The Autonomous Systems Industry Alliance (ASIA), launched in 2025, is a step in this direction, fostering industry collaboration in autonomous systems across the Indo-Pacific.
The road ahead
The India-US RDP Agreement is a unique opportunity to elevate India’s defence exports from components to systems, cementing its place in the global arms market. By fostering co-production, validating platforms, and opening U.S. markets, it could transform India’s defence ecosystem. However, success depends on overcoming procurement misalignments, easing information flow, ensuring certification compatibility, encouraging close interaction between the defence industries in India and the U.S., and reforming domestic policies. As India and the US negotiate a new 10-year defence framework for 2025–2035, the RDP could be the cornerstone of a partnership that redefines bilateral ties.
For India, the stakes are high, but the rewards are higher. With strategic foresight, the RDP Agreement could easily propel India towards its INR 50,000 Crore or USD 6 billion export goal, proving that India-U.S. RDP Agreement: A Potential Booster for Indian Defence Exports it’s not just a supplier of parts but a proven builder of world-class defence systems.
Pradeep S Mehta and Anjali Shekhawat are working at CUTS International, a 41-year-old global NGO working on public policy research and advocacy issues. Col Shailender Arya, is a Senior Advisor, with The Asia Group
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