‘Bang for the buck’: PM Modi pitches India as EU’s defence manufacturing hub

When India and the European Union had meetings around Republic Day 2026 Prime Minister Narendra Modi said something. He told partners that they should think of India as more than just a place to sell things. Prime Minister Narendra Modi wants them to see India as a place to make defence things because it can do it for a lower cost. India is a place for Europe to make the things it needs for defence. Prime Minister Narendra Modi used a phrase that means getting a result for the money you spend which is “bang, for the buck”. The pitch is where a big India and European Union security and defence team up meets a trade deal Indias push to make its own defence equipment and the European Unions desire to be more independent.

I will explain what Modi said and why he said it what India has to offer what the European Union is looking for the things that can happen the bad things that can happen and what we should look out for next.

I am using the important information, from the best sources that I have listed below.

1) So I want to know what really went down and what Modi said at that moment you know, the whole situation surrounding it. What did Modi actually say in that instant I am curious to find out what Modi said.

The India and European Union summit was held in New Delhi around Republic Day in 2026. Leaders from the European Commission and the European Council were there. India and the European Union announced that they are starting a Security and Defence Partnership. This partnership will help India and the European Union work together closely on things like security at sea, computer security fighting against terrorism and working together on defence industries. India and the European Union want to deepen their cooperation in these areas. The Security and Defence Partnership is a step, for India and the European Union. When you see Modi talking with the EU leaders in the news he says that India and the EU can work together to make things. This can help change the way things are made and sent to people. Modi wants Europe to make things in India because it is a place to do that. He says India can give Europe a lot of value for its money, which means they get a lot for what they pay it is like getting a deal you know, a lot of bang, for the buck.

The way we say things is important because it shows that we are changing how we work with India. We used to think of India as a place that buys things from us. Now we want to work with India as a partner that makes things. This is like saying “let us make things in India that Europe needs to defend itself”. This change happened at the time as we tried to make a special trade agreement with India, which some people call a very big deal. We also want to make an agreement, about security, which means we will talk about defence every year.

2) Why now? Geopolitics, economics and timing

There are three things that are coming together and these things explain why something needs to happen now and why it is very important. The three major forces that are converging are the reason for the timing and the urgency of the situation, with these three forces.

The European Union is changing its strategy. Finding new suppliers. The European Union has been trying to reduce its dependence on one source or sources that are not very stable for important technologies and defence supplies. This is especially true after the problems of the last few years such as the pandemic disruptions, Russias invasion of Ukraine and tensions with China.

By adding India as another supplier and industrial partner Europe can reduce its risks. Build stronger supply chains. The European Unions draft documents show that they are willing to open up their programmes so India can participate. The European Union wants to work with India to make its supply chains more resilient. This is a deal, for the European Union and India.

India is really making progress in its industries. The Indian government has increased the money it spends on defence and made some changes to help private companies get involved. They have also made it easier for foreign companies to invest in India and changed some rules to help Indian companies grow. Because of this India can now make lots of things like planes, ships, missiles and electronics. India is even selling these things to countries. The government led by Modi has been talking about India being self-reliant and making things in India for a time. Now that India is actually making things at home it is believable that India can be a big centre, for manufacturing. Indias defence industry is getting stronger and stronger.

There is an effort to get India and the European Union to trade with each other more easily. People are talking about an important agreement that would let India and the European Union trade freely. This agreement is a big deal. If India and the European Union can agree on things like trade barriers and rules for where products come from European companies will get some advantages. They will not have to pay much in tariffs when they make things in India. India will also get some benefits. India will get money from companies and they will also get to use new technology. This is a thing for India and it makes it more likely that India and European countries will work together on defense projects. The European Union and India trade agreement is very important for a defense partnership between India and European countries. India and the European Union trade agreement makes a defense industrial partnership more attractive, to India and European countries.

These things all came together to create a time for Modi to talk to the leaders of the European Union. He wanted to tell them that India is a place to make defence equipment because it is cheap and we have skilled people who can do it. India can make a lot of defence kit at a cost.

3) What does the phrase “bang for the buck” really mean. The things that India has to offer when you do business with India. The phrase “bang for the buck” is what people use to talk about India. So when we talk about “bang for the buck” we are talking about the benefits of doing business with India. India is a country that offers a lot of “bang for the buck” which means India gives you a lot in return, for your money.

When leaders and trade ministers say “bang for the buck” they are talking about a bunch of strengths that the trade deal has. The trade deal has a lot of things about it. Leaders and trade ministers like to say “bang for the buck” because it means they are getting a lot of benefits, from the trade deal. The trade deal is a thing and leaders and trade ministers think it is a good use of their money. They like the trade deal because it has concrete strengths.

a) Cost competitiveness and scale

The cost of labour is really different in India compared to Western Europe. India has a lot of people who’re good at engineering and the factories are getting bigger. This means that India can make things like parts and systems at a lower cost than Western Europe. This is especially true for things that are made in quantities and are the same every time like ammunition and electronics. India can also make vehicle components and some sensors at a cost. This is important for things that are made in quantities. You can find information about this in the news, about the India and European Union meeting.

b) A growing skilled industrial base

India produces a lot of engineers and technicians every year. The private defence companies in India have become very good at putting systems together. The government companies like HAL and BDL have also improved their skills by working with companies and learning new technologies. Because of this India is not a place where people do simple work for low pay. India can actually handle tasks like putting things together and even do some design work for defence systems. India can do assembly and some design work, for defence systems.

c) Policy incentives and reform

India has made it easier for other countries to invest in the defence industry by changing the rules for Foreign Direct Investment. The government has also come up with incentives that are based on how well a company performs. This means that companies will get rewards if they do a job.

India also wants companies to use products when they make things for the defence industry. The government has made it simpler for companies to get the permits to make and sell defence products.

All these changes make it easier for companies from Europe to start or expand their operations in India. The new rules and incentives are like a push and a pull for European companies to set up or deepen production, in India. European firms can now easily set up. Deepen production in India.

d) Existing defence trade and partnerships with EU members

Some European Union countries are already selling things like planes and naval systems to India. They also sell things like avionics and engines and equipment for surveillance. Indian companies are using technology in projects they are working on together. This means it is easier for them to work together on projects because they already know how to work with each other. The European Union countries and India can collaborate easily on military platforms and components like aircraft and naval systems because they are already familiar, with each other.

e) Geographic and strategic logic

India is in a spot because it is where the Indian Ocean meets the fast growing markets of Asia. This means that things made in India can be sent to Europe and also to customers in the region. This is a help when it comes to getting certain equipment and spare parts to where they are needed. Indias location is really good, for this kind of thing.

4) Why the European Union might accept India as a partner to make defence equipment or even try to get India as a partner to make defence equipment. The European Union and India can work together to make things like tanks and guns. This can be good for the European Union because India is very good at making defence equipment. The European Union might want India to help them make defence equipment so they can protect themselves from countries. India is also very good at making defence equipment for a price, which can be good for the European Union. The European Union might even try to get India to be their partner to make defence equipment because they want to be friends, with India and work together. India and the European Union can help each other make defence equipment and keep themselves safe.

From the EU side, motivations are pragmatic and strategic:

Europe wants to make sure it has supply-chain resilience. This means Europe does not want to depend on one vendor for things. In the past Europe had problems with depending on Russia for some systems. Europe also does not want to rely on a few suppliers. If Europe has suppliers, from different places it reduces the risk of something going wrong and causing problems. This is because there are not many chokepoints where things can get stuck. Europe wants to have supplier geographies to stay safe.

The cost of things and how competitive industries are is important. Making things in India can be cheaper when you need a lot of something or it is not very complicated, like some parts. This means Europe can focus on researching and developing things making high value products and putting all the parts together at home. They can also send the work that needs to be done over and over to India. This way Europe can do the difficult work and India can do the work that is easier and needs to be done many times.

Political diversification & partnerships in the Indo-Pacific. Strengthening India as an industrial counterweight to an assertive China aligns with EU foreign policy goals to support like-minded partners.

Europe can get treatment in the market through the Free Trade Agreement and the rules for buying things. This means Indian factories can sell things to countries, which is good for everyone involved in the market access and business. Indian plants can supply things to countries and that is a good thing for Europe and India it is like a win for market access and a win, for business. This is what we mean by market access and reciprocal business.

You can see the reasons behind this in the papers and reports from the European Union about the partnership and the Free Trade Agreement. The plan for the partnership includes talking to each other every year and working together on things, like the sea, computers stopping terrorism and making weapons.

5) The concrete forms of cooperation that companies could take part in are things like working and sharing ideas. Concrete forms of cooperation are very important, for businesses. We need to think about what concrete forms of cooperation’re possible.

If the things that are being said actually happen the partnership, with the company could include:

Joint ventures and manufacturing hubs are really important. European companies set up their factories or joint venture plants in India. They use these plants to make all sorts of things like vehicles, electronics and ammunition. They also make parts, for ships and unmanned aerial vehicles, which people often call drones and other subsystems.

Technology transfer and co-development are really important. European design houses and Indian firms are working together to create systems. Europe is providing the parts and India is putting everything together and making sure it works for people in India. This way European design houses and Indian firms can make something useful for people, in India.

Indian manufacturers need to make some changes to sell their products to NATO supply chains. They have to improve the quality of their products and get the certificates. This is a first step. They need to work on standardisation and certification alignment and also make quality upgrades.

The European Union collaborative programmes are something that Indian companies can be a part of. The European Union could let Indian firms join some defence projects that the European Union is working on with countries. This could include projects that are related to PESCO. The European Union will make the decision on this. There are reports that the European Union will allow India to participate in some programmes that are meant to develop capabilities. The European Union collaborative programmes will be open, to firms. Indian firms can join the European Union in some defence projects.

India and Europe can work together to send things to countries. They can make kits together. Sell them to other countries that are okay with buying from both India and Europe as long as they follow the rules about what can be sent out and get approval, from the government. India and Europe have to make sure they are allowed to do this.

6) Economic and security benefits (for India and the EU)

For India

Investment and improving industries go hand in hand. When European companies invest they bring in money, ways of managing things and better methods of production. This is what we mean by investment and improving industries. European investment is very important, for this.

When we talk about employment and supply-chain growth we have to think about how new plants can make a difference. These new plants create jobs that need skills and they also help smaller companies that supply things to the main businesses. This is really good for the companies like the Tier-2 and Tier-3 suppliers because it gives them a chance to grow and work with the bigger companies. Employment and supply-chain growth are very important for the economy and new plants are a part of making that happen. They bring jobs and new opportunities, for employment and supply-chain growth to the area.

Indian defence exports can really benefit from manufacturing in Europe. This is because when we make things in quantities the cost of each item goes down. So if we start making things in Europe it can help defence exports and also make each unit cheaper. This is what we call scale economies. It is like when you buy things in bulk you get a deal. Local manufacturing, for Europe can be a way to increase Indian defence exports and make them more affordable.

Technology spillovers are really important. When people work together it can help India move up the value chain. This means India can start doing complex things like systems design and making sensors. Technology spillovers and collaboration can make a difference, for India in the technology sector especially with systems design and sensors.

For the EU

Lower manufacturing costs for things that’re not the main parts of a product can be really helpful. This can help European companies stay competitive with companies, around the world. European firms can then focus on the parts of their products and still sell them for a good price.

Having supply chains is really important. This is because when we have different sources for the things we need it reduces the risk that comes from problems in other countries. So diversification is a thing, for supply chains. It helps to reduce risk. This means that our supply chains are safer when we have diversification.

Having a partnership is really good for us. When we work closely with India on business and industry it helps to make our relationship with them even stronger. This is very important when there are a lot of countries competing with each other. A closer industrial tie with India really strengthens the bonds, between our countries in a world where a lot of countries do not agree on things. This means that India and our country can trust each other more and work better.

7) Key risks, frictions and constraints

The headline makes people feel optimistic. It hides some big problems. The headline is really about being optimistic. The optimism, from the headline does not tell us about the complications that are really significant.

a) Technology-security and export-control concerns

Defence technologies are used for two things. That is why they are controlled very tightly. The people who sell these technologies in Europe and the politicians have to make sure they get paid for what they sell. They also have to think about not letting the wrong people get these technologies working with NATO and not making other countries angry. Some technologies are very sensitive so they will be kept secret and if something is made in India with the help of another country that country will have to make sure it is used for the thing and not sent to someone else. This makes it very hard to share technologies, with other countries. (See coverage of how the partnership’s framed to protect strategic defence technologies.)

b) Certification, quality and standards

European defence markets and NATO supply chains have high standards. Indian companies that want to supply to these markets must follow quality rules do a lot of testing and make sure their products last a long time. This is not easy. It will take time and money to do it right. If Indian companies do not meet these standards they will probably only be able to make parts that’re not very important and that do not have a big impact, on the European defence markets and NATO supply chains. European defence markets will still be a market for Indian suppliers to break into.

c) Intellectual property (IP) and control issues

European firms are concerned about keeping their property safe when they make things in other countries. If they are going to make a deal it needs to have protections, for intellectual property and ways to build trust especially when it comes to the design or the source code of software. European firms want to make sure their intellectual property is safe.

d) Political and human-rights considerations

Some European political parties and NGOs will take a look at partnerships with India when it comes to human rights and how the country is governed. This can make it difficult for companies to work together and limit what they can achieve. It may also lead to conditions being placed on these partnerships, which can be a problem for India and European companies that want to work on industrial deals particularly on human rights and governance issues, with India.

e) Geopolitical signaling to other powers

The European Union and India are making connections when it comes to defence and industry. China or other countries might see this as the European Union and India working together on a plan. The European Union wants to be careful so it does not take sides in a fight between powerful countries. The European Union will have to be careful, about how close it gets to India so it can stay out of trouble.

f) Domestic industrial politics in Europe

European defence companies and their unions might not want to move their work to countries. They do not want to lose jobs that the government cares about. The problem of Brexit and the idea of having companies, in each country can make it hard for European defence companies to work together.

8) Things that need to happen. Rules that will help make the project successful, like the conditions and the policy levers that will determine the success of the project specifically the conditions and policy levers.

There are some things that the government can do to make a difference. Several concrete policy levers, like the rules and laws they make will shape what actually happens with the outcomes of these policies. The policy levers are important because they will determine what the results are. Several policy levers, such as these ones will have a big impact, on the outcomes.

The rules in the EU-India trade deal are very important. They will decide if it is an idea for European companies to make things in India. The EU-India trade deal has things like tariffs rules about where products come from access to government contracts and making sure the rules are the same. These things will determine if making things in India is a choice for European companies. The EU-India trade deal and its rules will play a role, in this decision.

We need to make export controls work together. This means we have to negotiate rules that let us control how things are used and where they are sent again so we can protect technology like export control. At the time we want to allow people to work together to make things as long as it is legitimate and follows the rules of export control. This will help us balance protection of technology with the need, for co-production and export control.

India and the European Union are thinking about what they can do to help each other. India may give some benefits, like money and land to make things easier. They will also try to make it simple for people to get what they need by having one place to go to for all the clearances. The European Union may help India by working on projects and showing them how to do things faster. They may also approve projects quickly so that they can start working on them right away. India and the European Union want to make sure that they can work together smoothly so they are thinking about what incentives and assurances they can offer to each other.

We need to improve the quality of things in India. This can be done by following the standards as other countries. We can get money from countries or work together with them to make our quality checking labs and testing places better. This will help raise the quality of labs and testing ranges. We need to focus on capacity building and standards alignment, for quality assurance, certification labs and testing ranges.

Local supply chain development is very important. European firms want to find reliable suppliers in their own country like Tier 2 and Tier 3 suppliers. India needs to make sure it has a base of suppliers who can provide the necessary components, raw materials and subassemblies. This means India must develop a supplier base for components India must develop a resilient supplier base for raw materials and India must develop a resilient supplier base, for subassemblies.

9) Likely sectors and items to watch first

Defence items for the European Union are not all going to be made in India at the rate. At first the focus will probably be on the defence items for the European Union where there is not risk and making them does not require a lot of skill like where it is all, about labour or just putting things together:

Ammunition and ordnance — standardised, high-volume, less sensitive.

Electronics and C4ISR components — non-core modules and assemblies.

Vehicle components and support systems — wheels, subsystems for logistics vehicles.

Unmanned systems (UAV subassemblies) — sensors, frames, payload integration.

Shipbuilding components and maintenance — modular components rather than entire high-end warships.

Maintenance, Repair & Overhaul (MRO) for equipment in the region — win-win for long lifecycle support.

Some things, like high-end propulsion systems and stealth materials will probably stay secret for a time. This also includes sensors and certain missile technologies. These high-end propulsion systems and stealth materials are really important so they will stay tightly controlled. The advanced sensors and certain missile technologies will also stay secret for longer.

10) So what does success look like for the project. We need to think about what it will look like in the term and also what it will look like in the medium term and even what success will look like in the long term for the project. Success, for the project is something we have to consider from all these different time perspectives.

For the term, which is about one to two years we can expect to see a few things happen with the partnership. This includes things like memoranda of understanding and joint venture announcements. We will also see some pilot manufacturing lines for parts that’re not critical to the overall system. The free trade agreement will make it easier to trade and get the things we need.

We will have mechanisms in place such as annual defence dialogues, which will be working properly. Several news reports are already saying that we will have a security dialogue. This is something that has been planned. The annual security dialogue is a part of the partnership between the countries. It is a good step forward for the partnership. The memoranda of understanding and joint venture announcements are also important, for the partnership.

Medium term (3–5 years): Operational JV plants delivering components to European supply chains, Indian suppliers certified to European QA regimes, and some co-development projects underway.

In the term, which is about five to ten years India will have a strong connection with other countries for making defence equipment. This means India will be a part of making some types of equipment and will work together with other countries to make new and better systems. India will also get money from countries to help with this and will share ideas and expertise. Then India and these other countries will sell these systems together with both their names, on them.

11) Domestic political economy — winners and losers in India and Europe

In India the defence firms, which include both private companies will benefit from this. The people who make components the engineers and the shipyards will also gain from this. The regions where these plants are located will see more jobs being created. However the old public sector units and unions might not like the changes that are coming. They might resist these changes. The government will have to be careful about how they buy things so that people do not get upset. There is no problem. The government has to manage things in a way that avoids problems with people or politics. Defence firms, like these will be affected by the decisions the government makes.

In Europe the main companies that get the jobs could make money from designing and using technology. They can then give the work that needs a lot of labor to people in India.. People who work in factories that do not make as much money might see some changes. The government might feel pressure to keep jobs in their country so they might try to protect those jobs or make special rules for them. This is because people want jobs to stay in their country not go to other places like India. The main companies in Europe like the contractors will still be in charge and make the important decisions, about designing and using high technology.

12) Questions and red flags to monitor

Will sensitive technology be kept off-limits to everyone? We need to watch how the language about export control is written in the partnership and the chapters of any Free Trade Agreement. If it is too permissive there will be a political backlash. On the hand if it is too restrictive it will be a commercial disincentive for companies that want to do business. Sensitive technology and export control language are very important, in this partnership and any Free Trade Agreement chapters.

The way things are bought will change. If European governments start to buy defence equipment that is made in India that is a deal. This is because it means Indian companies can sell their products to governments.. If European governments only want to buy from their own countries then Indian companies will only be able to sell their products to other countries or work with other companies to make parts. This will limit what Indian companies can do. European governments buying Indian-made defence equipment is a step, for Indian companies.

So what is going to happen with the certification and the intellectual property? The progress that we make in these areas of certification and intellectual property will be the thing that determines how deeper we can cooperate with each other in terms of certification and intellectual property.

So how will other countries and organizations like parties react to this situation? The way the United States, China, Russia and the countries, around them respond will really affect the space and decide if we can work together.

People in Europe who do not like the European Union or groups that care about rights can cause problems. Problems at home like what’s going on in politics can also make it harder or slower to set up technical cooperation, between countries.

13) Historical precedents and comparable models

There are precedents for lower-cost manufacturing bases supplying higher-cost markets in defence and aerospace:

Civil aerospace supply chains are really important. For example companies like Airbus and Boeing get things from suppliers around the world. They like to work with people in places where it does not cost much but they have to be very careful about the quality of the things they get. So they only work with suppliers who can meet their high standards. This is the case with civil aerospace supply chains, like Airbus and Boeing.

There are some connections between the automotive and defence industries. For example automotive companies that make parts in countries where it is cheaper to do can also supply these parts to military vehicles. This is what we call an automotive-defence crossover. So auto component plants in lower-cost countries can supply vehicles. These automotive-defence crossovers are really important because they help keep costs down. The auto component plants in these countries can make parts, for vehicles and also for regular cars. This is an example of how the automotive and defence industries can work together.

In the past the United Kingdom and European countries shared the work of making some defence products with their allies. They did this in a way to keep the important design work secret. The United Kingdom and European countries only shared this work with countries they trusted. This was done to protect the defence products and the design work that went into making them.

Those models show success depends on strict QA, strong IP protections, and clear political trust.