New Delhi is reassessing its long-standing defense relationship with Russia, exploring options for deepening co-production even as Moscow’s ability to reliably supply arms diminishes. The shift comes amid growing concerns about Russia’s declining manufacturing capacity, exacerbated by the ongoing war in Ukraine and resulting sanctions and a corresponding increase in its reliance on China for critical components.
While India remains heavily reliant on Russian military equipment, a confluence of factors is forcing a recalibration of its procurement strategy. Russia’s absence from major arms showcases, such as the February 2026 Singapore Air Show – where it exhibited no platforms including airplanes, helicopters, or unmanned aerial vehicles – is a visible sign of its weakened position. According to a recent report by the Center for Strategic and International Studies, Russia’s overall manufacturing capacity is declining due to a shortage of skilled labor, migration patterns linked to the conflict, and reduced investment.
The war in Ukraine has placed a significant strain on the Russian economy, with defense spending now accounting for approximately 7 percent of GDP and 32 percent of the 2025 federal budget, according to data from the Stockholm International Peace Research Institute. This unprecedented fiscal expansion, despite President Vladimir Putin’s public statements about cutting defense spending, has created supply chain disruptions across various industries. A key challenge for Russia is the lack of availability of machine tools and high-technology components.
China has stepped in to fill the gap, supplying Russia with an estimated $10.3 billion worth of machinery and electronics. Critically, this includes components like microchips necessary for the production of ballistic missiles, such as the Oreshnik and Iskander-M. Russia is now largely dependent on China for its machine tool supply, a development that introduces a new strategic layer for India, which already maintains a complex relationship with Beijing.
India’s exploration of deeper co-production with Russia, signaled by a delegation of Indian defense industry officials visiting Moscow in late October 2025, reflects a desire to mitigate potential disruptions to its arms supply. Discussions reportedly focused on the production of spare parts for MiG-29 fighter jets and Russian air-defense systems. Russia has also proposed establishing facilities within India to develop equipment for export to Moscow, potentially offering a new revenue stream for the Indian defense industry.
However, Indian companies are proceeding with caution, wary of potential secondary sanctions that could jeopardize existing or planned projects with Western firms. One Indian executive, speaking anonymously to Reuters, expressed concerns about the risks associated with expanding cooperation with Russia. This hesitancy underscores the delicate balancing act India faces as it seeks to maintain its defense capabilities while navigating a complex geopolitical landscape.
The shift in dynamics is already visible in the global arms market. France has surpassed Russia as the second-largest arms exporter by value. Despite this, India continues to co-produce missiles and Kalashnikov rifles with Russia, though even these programs have faced challenges, such as delays in the delivery of AK-203 assembly kits, which prompted New Delhi to procure 73,000 rifles from the United States.
The evolving situation also comes after a recent trade agreement between the United States and India, announced by President Donald Trump. The agreement, outlined in more detail by US officials, included commitments by India to increase imports of American petroleum, defense equipment, aircraft, telecom products, and pharmaceuticals, valued at $500 billion over a multi-year framework. Trump initially stated the deal was contingent on India ending purchases of Russian oil, a claim that Indian refiners have disputed, stating they have received no directive to halt such purchases, with shipments already booked through March 2026. Imports have declined to 1.38 million barrels per day in December, but Russia remains India’s top crude supplier.
The potential for India to shift crude purchases toward the United States and Venezuela, as suggested by Washington, remains to be seen. However, the broader trend is clear: India is actively diversifying its defense procurement sources and investing in domestic production to reduce its reliance on any single supplier. This recalibration is not simply a response to Russia’s weakening position, but a strategic imperative driven by a desire for greater autonomy and resilience in a rapidly changing world.
The long-term implications of these developments are significant. A diminished Russia as an arms supplier could reshape the global arms market, creating opportunities for other players, including the United States, France, and Israel. For India, it necessitates a sustained commitment to defense modernization, technological innovation, and strategic partnerships to safeguard its security interests.
