Without reform, licensing overhaul and long-term capital, export targets will remain aspirational
A visitor aims a simulation gun at a target during the International Defence Exhibition and Seminar in Karachi, Pakistan. PHOTO: File/REUTERS
ISLAMABAD:
In January 2026, the Senate Standing Committee on Defence Production, during its visit to Pakistan Ordnance Factories, asked the Ministry of Defence Production to ensure greater private-sector participation in the defence sector through adequate policy measures. This statement comes at a time when Pakistan’s defence deals crossed the $10 billion mark in 2025 and are expected to reach the $15 billion target in 2026.
However, the committee rightly noted that Pakistan’s private sector still enjoys a very small share in defence export figures. At the third World Defence Show organised in Riyadh from February 8-12, only 17 Pakistani companies (including state-owned enterprises such as National Radio Telecommunication Corporation (NRTC) and Pakistan Ordnance Factory (POF)) were listed as exhibitors, whereas 25 companies were registered from India.
Indian companies also included private-sector giant Adani Defence & Aerospace, which has poured billions into guided weapons research programmes. Recently, Adani Defence created a new entity, Adani Atomic, to set up privately owned nuclear power plants and applied for regulatory approvals under the SHANTI Act, 2025.
This calls for a reform agenda on the part of the Ministry of Defence Production that could ease barriers to private-sector participation and incentivise investment through public-private partnerships.
One model that has worked well is that of the US, where private contractors and university research partnerships drive military technological advancements on a regular basis. For example, Caltech manages the Jet Propulsion Laboratory (JPL) for NASA, acting as a centre of excellence that has contributed to the design of space robotic missions.
Similarly, during World War II, MIT developed sophisticated radar technology, while the University of Chicago and the University of California, Berkeley contributed jointly to atomic bomb research under the Manhattan Project.
However, such a triple-helix model with a niche in the defence industry is missing in Pakistan. There are some success stories, though they are few and far between. For example, SATUMA Pvt Limited has produced UAV solutions for the Pakistan Air Force and has actively engaged universities in applied research.
Similarly, there are promising case studies at NUST Science & Technology Park (NSTP) and the Air Force’s National Aerospace Science & Technology Park (NASTP) in various cities, but we have yet to see them scale to the level of Adani Defence in India.
One way to bolster local industry is by implementing a stricter offset policy in defence procurements. Our current offset policy lacks an SME development framework, and there is no structured mechanism to channel offset benefits towards small and medium enterprises, which are typically most in need of such industrial development policies.
There is also no dedicated offset management wing. India’s Defence Offset Policy includes a dedicated Offset Management Wing with published guidelines for offset credit banking and trading. Similarly, South Korea’s Defence Acquisition Programme Administration (DAPA) maintains a quantitative scoring matrix for offset proposals. Pakistan’s policy would benefit from adopting similar levels of process detail and institutional capacity.
Beyond offset reform, the Ministry of Defence Production must also revisit its licensing and regulatory framework. Currently, private firms seeking defence manufacturing licences navigate a cumbersome approval process spread across multiple agencies, often waiting years before a single contract materialises.
A single-window clearance mechanism, similar to what India introduced through its Defence Industrial Corridors in Uttar Pradesh and Tamil Nadu, could dramatically reduce time-to-market for domestic manufacturers and signal a credible commitment to private-sector investors.
Access to patient, long-term capital is another binding constraint. Defence technology development cycles are long, and commercial banks are ill-equipped to finance them. The government should explore the creation of a Defence Innovation Fund, potentially seeded through the National Development Finance Corporation, to provide concessional financing to promising defence startups and SMEs.
Turkey’s experience with TUSAS and ROKETSAN – both of which grew from modest beginnings into globally competitive firms on the back of sustained state-backed financing – offers a relevant template for Pakistan.
Finally, none of these reforms will bear fruit without a coherent demand signal from the armed forces. The services need to publish multi-year acquisition roadmaps that give private firms the visibility required to plan long-term investments in research, tooling and talent. When private companies can see a credible pipeline of domestic orders, they are far more willing to risk capital on indigenous development rather than simply assembling imported components.
Pakistan’s defence export ambitions are achievable, but the $15 billion target will remain elusive if the private sector continues to operate at the margins. The Senate standing committee has identified the right problem; now the Ministry of Defence Production must deliver the policy architecture to match it.
The writer is a Cambridge graduate and works as a strategy consultant
