In most sectors of the economy, Pakistan must be guided by comparative advantage. We cannot — and should not — produce everything at home. Scarce capital should flow to areas where we can compete best, globally. But defence is not a typical sector. It is strategic, sensitive and, in times of crisis, unforgiving of dependence.
Pakistan’s defence capability has long relied on a mix of domestic production and imports. Institutions such as Pakistan Ordnance Factories, Heavy Industries Taxila and Pakistan Aeronautical Complex have built credible capacity in munitions, land systems and aircraft assembly. Yet Pakistan remains dependent on foreign suppliers for critical platforms, subsystems and technologies.
Quantifying this dependence precisely is difficult. Public data on defence imports are fragmented. The Stockholm International Peace Research Institute (SIPRI) shows that Pakistan remains among the world’s largest importers of major arms, with imports rising significantly in recent years and China accounting for the bulk of this supply. However, SIPRI measures volume rather than monetary value, while customs data captures only a narrow slice of trade. The exact annual import bill may be unclear, but the direction is not: Pakistan continues to rely materially on external sources for key defence capabilities.
That reliance carries risks that go beyond cost. In a crisis, supply chains can be disrupted, deliveries delayed, and spare parts restricted. Export controls, sanctions or geopolitical shifts can constrain access precisely when it is most needed. Defence procurement is not like sourcing consumer goods; it is shaped by politics as much as by price.
The path forward lies in building a defence ecosystem rather than expanding a state-centric production model
This is why defence production must be treated differently from other industries. While Pakistan may not have a comparative advantage in every manufacturing line, it has a strategic imperative to build domestic capability in areas that underpin national security. Indigenisation in defence is not about protectionism — it is about resilience.
Other countries offer useful lessons. India has opened its defence sector to private participation while retaining state oversight. Large business groups such as Tata and Mahindra now manufacture components, develop subsystems and participate in global supply chains. The state remains the anchor, but the private sector has become an engine of scale and innovation.
A different lesson comes from Iran. Under sanctions and isolation, Iran prioritised self-sufficiency in missiles, drones and electronics. It mobilised universities, research centres and industry to focus on a narrow set of strategic technologies. Pakistan need not emulate Iran’s political or economic model. But it can draw a clear lesson: when access to imports is uncertain, disciplined indigenisation becomes a necessity rather than a choice.
For Pakistan, the path forward lies in building a defence ecosystem rather than expanding a state-centric production model. Public-sector entities should increasingly act as system integrators — setting standards, ensuring quality and assembling final platforms. The private sector should be brought into the supply chain to produce components, electronics, software, materials and specialised engineering inputs.
A dedicated innovation fund, coupled with testing platforms in collaboration with the armed forces, can help translate ideas into deployable systems.
This requires policy clarity. A Defence Industrial Participation framework should provide long-term procurement visibility, encourage local content, and mandate technology transfer in imports. Without predictable demand, private firms will not invest. Transparent procurement processes — particularly for non-sensitive systems — can widen participation while maintaining security safeguards.
The starting point should be areas where barriers to entry are lower and returns are faster. Drones, anti-drone systems, communications equipment, sensors, cyber capabilities, ammunition and maintenance, repair and overhaul services offer realistic opportunities. Pakistan already has strengths in information technology, engineering and manufacturing that can be leveraged in these segments.
Universities and technical institutes must also be integrated into defence innovation. A dedicated innovation fund, coupled with testing platforms in collaboration with the armed forces, can help translate ideas into deployable systems. Countries that have succeeded have built strong links between research, industry and the military, but Pakistan’s ecosystem remains fragmented.
Furthermore, exports must be part of the strategy; domestic demand alone cannot sustain a competitive defence industry. Pakistan has longstanding defence relationships in parts of Africa and the Middle East. By combining equipment with training, maintenance and financing, it can expand its presence and generate foreign exchange.
The broader economic gains are significant. Defence manufacturing can stimulate high-value engineering, create skilled jobs and deepen industrial capability. It can also reduce the foreign exchange burden of imports over time. But these benefits will not materialise without a shift in approach.
The principle is straightforward. In most sectors, competitiveness should determine what Pakistan produces. In defence, strategy must also play a decisive role. A country that depends entirely on others for its security cannot claim full sovereignty.
The author, a former CEO of Unilever Pakistan and of the Pakistan Business Council, writes on economic policies that promote sustainable and inclusive growth.
Published in Dawn, The Business and Finance Weekly, April 6th, 2026