Are Pakistan’s booming defence exports a strategic boon but domestic bane?

IN LATE 2025 and early 2026, Pakistan unveiled a series of high-profile defence export agreements, signalling a structural shift in its strategic and economic orientation. Most prominently, in December, Islamabad concluded a multibillion-dollar contract with Libya to supply the JF-17 Thunder fighter aircraft, co-developed with China and manufactured in Pakistan. Parallel negotiations for the fighter and other defence deals have been reported with Bangladesh, Saudi Arabia and Indonesia. Myanmar already operates Pakistani-manufactured aircraft. For the first time, Pakistan appears poised to emerge as a significant exporter of modern combat aircraft, signalling a departure from a past where it was massively reliant on imported arms and external military assistance.

At the core of this transformation is the Pakistan military’s effort to convert the country’s longstanding military-industrial infrastructure into a sustainable source of export revenue. Historically, Pakistan’s defence sector has been oriented towards import substitution and domestic force modernisation, and remained heavily dependent on foreign suppliers and concessional arrangements. The recent wave of export contracts indicates a deliberate attempt to reposition this sector as a driver of foreign exchange earnings, industrial upgrading and geopolitical leverage. In effect, Islamabad is using defence production not merely as a strategic necessity but as an instrument of economic statecraft.