Speaking to CNBC-TV18, Kalyani said access to flexible export credit remains one of the biggest challenges for Indian defence exporters, particularly in emerging markets across Africa and Southeast Asia. He argued that the current export credit framework, routed through the EXIM Bank, does not adequately address the unique requirements of defence contracts.
“One major reform is the availability of export credit. EXIM credit needs to be more flexible and aligned with the needs of this business,” Kalyani said. He suggested that export credit for defence equipment should be administered through the Ministry of Defence (MoD), which, according to him, has a deeper understanding of the sector’s operational and geopolitical complexities.
Kalyani warned that India risks losing export opportunities to competitors that offer easier and longer-term financing. “Our neighbour is providing three-year credit to these countries and walking away with the business,” he said, without naming the country. Many developing nations, he added, are heavily dependent on credit-backed defence purchases, making financing terms a decisive factor in contract awards.
Apart from export financing, Kalyani also urged the government to allocate a dedicated research and development (R&D) budget for private defence companies in the upcoming budget. At present, most defence R&D funding is channelled through the Defence Research and Development Organisation (DRDO).
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“Private companies also need support to speed up innovation,” he said, noting that a more inclusive R&D framework would help accelerate indigenisation, improve product competitiveness, and strengthen India’s position as a global defence exporter.
Kalyani said reforms in export credit and R&D funding would be the two most impactful measures the government could announce in Union Budget 2026 to support the rapidly expanding private defence sector.
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Watch accompanying video for entire conversation.
