How the INDIA CHINA ARMS RACE Is Being Redrawn by the 2024 SIPRI Report

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The latest SIPRI data on the global arms industry has added a new layer of complexity to the INDIA CHINA ARMS RACE. Rather than a simple narrative of ever-rising budgets and linear military build-up, the numbers for 2024 reveal a world where demand is soaring but regional trajectories are sharply diverging. Global arms revenues for the Top 100 companies reached a record level, yet Asia–Oceania as a region actually contracted in real terms, almost entirely because Chinese firms stumbled while others surged.

India, meanwhile, is quietly re-engineering its defence ecosystem. Under the Atmanirbhar Bharat policy, domestic production and exports have risen rapidly, even as China’s major arms producers suffer a 10% revenue decline driven by corruption crackdowns and procurement delays. In other words, the INDIA CHINA ARMS RACE is no longer just about who orders more tanks, missiles, or fighter jets; it is increasingly about whose industrial base is more flexible, transparent, and export-ready.

INDIA–CHINA ARMS RACE IS SHIFTING TO THE FACTORY FLOOR

For decades, discussions about the INDIA CHINA ARMS RACE focused on visible metrics: the number of brigades on each front, the size of air fleets, and the pace of naval deployments in the Indian Ocean and the Western Pacific. The 2024 SIPRI report forces a shift in perspective. It shows that while global arms revenues grew by about 5.9% to roughly $679 billion in 2024, Chinese arms firms collectively shrank by around 10%, even as Indian defence companies grew and global demand soared. 

This contrast is vital for understanding the long-term INDIA CHINA ARMS RACE. China still possesses a much larger industrial base and more advanced platforms in several domains, but its arms manufacturers are temporarily constrained by internal anti-corruption drives and contract reviews. India, starting from a smaller base, is benefiting from strong policy tailwinds, steady budget allocations, and a clear mandate to replace imports with domestic production. The race, for the moment, is not about raw speed but about who can maintain sustainable acceleration.

Demand Shocks and Production Lags

Global demand is being reshaped by the wars in Ukraine and Gaza, renewed great-power rivalry, and accelerating military modernization in Europe and Asia. This demand does not translate into revenue instantly. Arms contracts are large, multi-year projects, so there is a lag between when an order is placed and when it shows up as revenue on a balance sheet.

INDIA CHINA ARMS RACE and Supply-Chain Risk

The INDIA CHINA ARMS RACE is also mediated by access to critical technologies and materials. Restrictions on semiconductor exports, propulsion systems, and specialized machine tools affect how quickly either side can convert budgetary authorizations into deployable systems. China faces mounting export controls from the United States and its allies; India, while still dependent on imports for specific subsystems, is increasingly able to diversify suppliers and develop indigenous alternatives.

GLOBAL ARMS MARKET SHOWS AN UNEVEN BOOM

To place the INDIA CHINA ARMS RACE in perspective, consider how uneven the global boom has been. SIPRI’s 2024 Top 100 list shows U.S. companies accounting for roughly half of total arms revenues, with major firms like Lockheed Martin and Northrop Grumman expanding to meet long-term European and Indo-Pacific demand. 

European firms recorded double-digit growth, driven by ammunition, artillery, and sophisticated air-defence systems. Even some smaller producers in Central and Eastern Europe saw explosive revenue increases thanks to replenishment orders and regional security concerns. Against this backdrop, Asia-Oceania is the only region where combined arms revenues fell, primarily because the Chinese segment contracted.

Examples of Global Imbalances Affecting the INDIA CHINA ARMS RACE

Several examples illustrate the uneven nature of the current global cycle and its indirect impact on the INDIA CHINA ARMS RACE:

WHY CHINA’S ARMS INDUSTRY SLOWED IN 2024

The most striking element in the SIPRI data is the downturn among Chinese arms producers. The combined revenues of the eight Chinese firms in the Top 100 fell by about 10% to around $88 billion, the sharpest decline for any major producing country. This directly shapes the INDIA CHINA ARMS RACE because China’s industrial base is the primary engine behind the PLA’s modernization.

The downturn does not signal a strategic retreat. Instead, it reflects a moment when political, bureaucratic, and industrial dynamics collided. Anti-corruption campaigns and contract reviews in Beijing temporarily overrode growth objectives, slowing the flow of money from the state to state-owned enterprises (SOEs).

Corruption Crackdown and Procurement Paralysis

China has been running a long-term anti-corruption drive across the People’s Liberation Army, with the Rocket Force in particular facing intense scrutiny. Investigations, leadership reshuffles, and the removal of senior generals created a climate where signing large new contracts became risky for mid-level officials.

Sector-Specific Impacts on China

The slowdown has not been uniform across sectors:

These patterns suggest that in the current phase of the INDIA CHINA ARMS RACE, Beijing is prioritizing strategic air and missile capabilities over bulk land warfare platforms, while it cleans up procurement channels.

Cycle Saturation and Modernisation Maturity

There is also a structural element. Over the last two decades, China invested heavily in replacing legacy platforms with modern equivalents across its navy, air force, and ground forces. In some categories, the PLA may now be closer to saturation—focusing more on integration, training, and sustainment than on expanding fleet size. For example, once a critical number of modern destroyers or fighters is reached, additional units add diminishing returns compared to investments in networking, electronic warfare, and logistics.

This does not mean the INDIA CHINA ARMS RACE is waning. Instead, it is entering a phase where software, mission systems, and autonomous technologies may matter more than sheer hull count, a shift that potentially benefits agile and innovation-driven ecosystems.

HOW INDIA IS REWIRING ITS DEFENCE INDUSTRY

On the other side of the INDIA CHINA ARMS RACE, India is experiencing a very different dynamic. According to reporting based on SIPRI’s latest Top 100 list, the three Indian companies in the ranking—Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), and Mazagon Dock Shipbuilders Limited (MDL)—achieved a combined arms-revenue increase of about 8.2% in 2024. 

Beyond these headline figures, India’s Ministry of Defence reports that total indigenous defence production reached roughly ₹1.27 trillion in FY 2023–24, representing a 174% increase since 2014–15, and defence exports have climbed sharply to more than ₹21,000 crore. These numbers underscore how seriously New Delhi treats industrial self-reliance as a strategic pillar in the INDIA CHINA ARMS RACE.

BEL and the Rise of “Soft-Kill” Capabilities

Among the three major Indian firms, BEL has been the standout performer. Its growth is driven by systems that embody the shift from hardware-centric to network-centric warfare:

In the INDIA CHINA ARMS RACE, these “soft-kill” technologies are crucial. An advanced radar network and resilient communications can significantly amplify the effectiveness of existing platforms, often at a lower cost than buying new weapons. BEL’s order book reflects this shift towards information dominance.

MDL and India’s Naval Expansion

MDL has benefited from major programmes such as Project-75 submarines and Project-15B destroyers. As the Indian Navy seeks sea-denial and sea-control capabilities in the Indian Ocean Region, shipyards like MDL operate close to capacity. Each vessel launched or commissioned contributes both to India’s combat power and to the learning curve of its shipbuilding workforce.

From the perspective of the INDIA CHINA ARMS RACE, this naval build-up matters because China’s growing presence in the Indian Ocean—through bases, port access, and the deployment of surface and sub-surface assets—must be counterbalanced by credible Indian sea power. The competition is not only about numbers of hulls but also about the quality of anti-submarine warfare, missile integration, and networked sensors.

HAL, Production Cycles, and Future Spikes

HAL remains India’s largest defence producer but has seen only modest year-on-year revenue movements as it transitions between programme phases. Large contracts for Tejas Mk1A fighter jets, LCH helicopters, and upcoming trainer and transport projects will likely create revenue spikes as they move from design and testing into full-rate production.

ASIA–OCEANIA CONTEXT OF THE INDIA CHINA ARMS RACE

Although Asia–Oceania was the only region where arms-industry revenues declined in 2024, this picture is heavily skewed by the Chinese downturn. Other regional actors—Japan and South Korea in particular—saw dramatic growth in their defence industries.

For the INDIA CHINA ARMS RACE, this means that the competitive field is becoming more crowded. India and China are no longer the only serious industrial powers in the Indo-Pacific; they increasingly share the stage with Japan, South Korea, and Australia, as well as European and American firms with strong regional footprints.

Examples of Regional Armament Patterns

Several developments in the wider Indo-Pacific directly shape the INDIA CHINA ARMS RACE:

STRATEGIC CONSEQUENCES FOR THE INDO-PACIFIC

These industrial trends reshape the strategic underpinnings of the INDIA CHINA ARMS RACE. On land, China still holds quantitative and qualitative advantages in some domains, but procurement slowdowns and doctrinal evolution mean that India has more breathing space to modernise artillery, air defence, and ISR. At sea, the Indian Navy is expanding its blue-water footprint while China’s navy projects power from bases in the Western Pacific and beyond.

In the air and space domains, the race is clearly about the quality of sensors, electronic warfare, and network integration. Both India and China are investing in drones, loitering munitions, and AI-enabled decision-support tools. The side that can fuse data from multiple sensors into a coherent picture faster and more reliably gains a disproportionate advantage.

Illustrative Scenarios of Capability Use

Consider a few stylised scenarios that help explain how industrial strength translates into battlefield dynamics within the INDIA CHINA ARMS RACE:

SCENARIOS FOR THE INDIA CHINA ARMS RACE AFTER 2025

Looking beyond the 2024 snapshot, the INDIA CHINA ARMS RACE could evolve along several pathways. These are not predictions but structured possibilities that help planners, analysts, and investors think through the implications of current trends.

Scenario 1: Chinese Rebound

In this scenario, anti-corruption campaigns in China stabilise, new leadership teams consolidate control over SOEs, and procurement pipelines resume at full speed. Chinese arms-industry revenues return to positive growth, and stalled projects receive renewed funding. The INDIA CHINA ARMS RACE then reverts to a pattern where China’s sheer scale and technological depth dominate, although India’s improved industrial base still offers greater resilience and bargaining power.

Scenario 2: Indian Export Breakthrough

Here, India successfully converts prototype and limited-series platforms into credible export lines. Deals for Tejas fighters, BrahMos cruise missiles, artillery systems, and naval platforms with partners in Southeast Asia, Africa, and Latin America push Indian arms exports to new highs. Defence production grows faster than the domestic budget alone would allow, as external demand supplements internal orders.

If export-driven growth becomes large enough, it not only strengthens the industrial base but also creates enduring political relationships. In such a world, the INDIA CHINA ARMS RACE extends into the diplomatic and economic spheres as both sides compete to equip third countries.

Scenario 3: Slow Arms Race Under Budget Pressure

This Python example does not model real data but shows how analysts might explore the INDIA CHINA ARMS RACE numerically. Even with a smaller budget, a higher efficiency factor could narrow the capability gap. As India seeks to push its efficiency upwards and China attempts to restore its own, the race becomes more about institutional quality than absolute spending.

KEY TAKEAWAYS ON THE INDIA CHINA ARMS RACE

The 2024 SIPRI figures confirm that the global arms industry is booming, but they also show that the INDIA CHINA ARMS RACE is entering a more complex phase. China’s 10% revenue decline among its top arms firms is not a sign of weakness in absolute terms, but it is a reminder that even large, state-controlled military-industrial complexes can be slowed by internal politics and governance issues.

India, conversely, is midway through an ambitious experiment in defence self-reliance. Its rising production and exports, coupled with stronger partnerships and a growing private-sector role, give it new levers in the INDIA CHINA ARMS RACE. The coming years will hinge on whether India can maintain momentum on reforms and innovation, and whether China can restart a more transparent and efficient procurement cycle without sacrificing political control.

Ultimately, the INDIA CHINA ARMS RACE is no longer only about who fields more divisions or deploys more ships. It is about whose factories can consistently deliver, whose bureaucracies can approve contracts without paralysis, whose research establishments can innovate under constraints, and whose diplomacy can transform industrial capacity into long-term influence.