Russian Arms Exports Collapse by 92 Percent as Military-Industrial Complex Fails

Executive Summary:

• Russia’s arms exports dropped by 92 percent from 2021 to 2024 due to redirected resources for Ukraine, sanctions, inflation, and funding issues.
• The number of countries purchasing Russian arms has dropped dramatically. Major customers such as India have shown caution or shifted to competitors such as the People’s Republic of China.
• Russia has been promoting its Su-57E stealth fighter, emphasizing combat experience in Ukraine, but faces setbacks such as poor international sales and buyer reluctance. Despite challenges, Moscow is focusing on domestic contracts.

As Russian President Vladimir Putin’s “special military operation” (SVO) against Ukraine approaches its third year, its casualties increasingly include Russian arms exports, traditionally the economy’s second largest export earner after energy. By the end of 2024, Russian arms exports decreased fourteenfold from their levels in 2021 by 92 percent to less than $1 billion (Arbat Media, November 30, 2024). In 2021, before the full-scale invasion began, Russian arms exports generated $14.6 billion; in 2022, $8 billion; and in 2023, $3 billion. The most significant factor behind the reduction in exports is the redistribution of resources for domestic needs, as Russia’s military-industrial complex’s top priority is now equipping its own armed forces during its military conflict with Ukraine (see EDM, October 3, 2024).

In March 2023, the Stockholm International Peace Research Institute (SIPRI) reported that Russia, for the first time, dropped to third place in the ranking of the largest exporters of military equipment, behind the U.S. and France. The People’s Republic of China (PRC) and Germany are in fourth and fifth place in the world in arms exports, respectively. SIPRI reported that the Russian Federation exported 53 percent fewer weapons in 2019–2023 than in 2014–2018 (RIA Novosti, November 3, 2024).

The market for Russian armaments have declined from thirty-one countries in 2019 to just twelve in 2024 despite Russia continuing to work with major customers such as the PRC, Myanmar, and India. High interest rates, now 21 percent, further aggravate the market and impact the future of Russian defense manufacturers. In an ironic development, many previous customers have turned to the PRC, leaving the question of whether Russia can regain its market share. 

Rosoboronexport General Director and Deputy Chairman of the Russian Engineering Union Aleksandr Mikheev maintains that there are no problems, commenting, “The contract documents signed by Rosoboronexport since the beginning of 2024 for products for all branches of the armed forces, as well as civilian solutions in the interests of the armed forces and other law enforcement agencies of our partners, have allowed the company to keep the portfolio of orders at a record level of $55 billion.” Mikheev added that the production capacities currently available in Russia after fulfilling the state’s priority defense order, the sector’s excess capacity allows Rosoboronexport to fulfill completely its export contracts (RIA Novosti, December 27, 2024). Mikheev added, “Rosoboronexport’s order book at the end of 2024 reached a record in the company’s history … providing for the supply of Russian military products to 44 countries of the world” (Life.ru, December 28, 2024).

The previous month, Rosoboronexport announced that it had signed the first contracts with unnamed clients for Russian fifth-generation Su-57E fighters, the flagship of Russian combat aviation and of “great interest” to foreign customers (Life.ru, November 13, 2024). Only three countries currently produce fifth-generation stealth fighters—the PRC, the United States, and Russia. Mikheev also stressed that an advantage that the SU-57 had over other 5th-generation fighters in the global arms market is that it had acquired real-time combat experience during Russia’s “special military operation” (SVO) against Ukraine, where it demonstrated its effectiveness in countering American Patriot anti-aircraft missile systems and other Western air defense systems deployed there as well as operating in Syria.

The Sukhoi Design Bureau, part of the United Aircraft Corporation, developed the Su-57. The aircraft is produced in Siberia’s Komsomolsk-on-Amur Sukhoi Aviation Plant (KnAAZ). The Su-57’s first flight took place on January 29, 2010, but it was only a decade later, at the end of 2020, that the Russian Armed Forces received their first serial Su-57 (Trud, November 13, 2024). Interestingly, the year before the first Su-57s were delivered to the Russian armed forces, Russia’s then-Deputy Prime Minister for the Military-Industrial Complex, Yury Borisov, remarked the government was considering exporting the aircraft to “strategic partners” once indigenous needs were met (Tsar’grad Television Channel, June 12, 2019). In August 2020, Russia’s Federal Service for Military-Technical Cooperation said that several countries had already sent official applications to purchase Su-57 aircraft (RT Television Channel, November 2, 2020).

Undoubtedly tempering Mikheev’s enthusiastic sales pitches was Rosoboronexport’s earlier lackluster performance at the prestigious November 13–17 Dubai Airshow 2023. Unlike previous years, when the company announced multibillion-dollar deals, no contracts were signed this time, despite Rosoboronexport again offering potential customers the Su-57E (Novorosinform, November 22, 2024). The following year, the Su-57E flew at the PRC’s Zhuhai Air Show, where on November 12, it made its premier display flight for foreign observers (TASS, November 13, 2024). While the Russian government waits for SU-57 orders to flood in, Sukhoi’s KnAAZ facility will be busy fulfilling its state contract, which was concluded in 2019. The contract projects that by 2028, 76 Su-57 fighters will enter the Russian service (Mil.Press Voennoe RF, February 20, 2021).

India, a major market for Russian arms, is displaying caution about purchasing the SU-57 under its 2018 Multi-Role Fighter Aircraft (MRFA) program, intended to purchase 114 new fighters for the Indian Air Force (IAF). Air Marshal Anil Khosla (retired), when asked whether Saab’s leading contender Gripen-E would be the best for the IAF, which considers Pakistan and the PRC as its prime potential adversaries, replied,

I recommend going for the already tested and inducted Rafale aircraft (in phases). Adding another type of aircraft will add to the already diverse inventory. Most contenders offer the listed benefits (Transfer of Technology, Made in India, etc.). The extent of these offers needs to be assessed. However, go in for the Gripen if the deal is lucrative and provides maximum bang for the buck (The Eurasian Times, December 16, 2024).

Khosla notably did not mention any Russian aircraft.

A new era of Russian arms exports began after the 1991 collapse of the Soviet Union. Russia’s post-Soviet economic situation was so deplorable that any military equipment for which foreigners were willing to pay was sold, the only exceptions being nuclear munitions and their means of delivery. Similarly, as a former pillar of Russia’s export “hard currency” earners, the Russian government is seeking not only to staunch its decline in armaments exports but also increase them, dangling the Su-57 as cutting-edge technology equivalent to the best Western weaponry. A number of deepening problems are unfortunately complicating Rosoboronexport’s reentry to the global armaments trade, including SVO priority commitments, inflation, funding and payment issues, sanctions, and corruption, a skein of difficulties making the war against Ukraine seem simple by comparison.