Security by design: Defence, aerospace and derivative hedges

Combat-proven platforms, civil aviation muscle and market hedges form a tri-layer shield that stabilises capital and dampens geopolitical shocks today.

- BY NITIN SINGH

Defence production and exports serve not only as economic assets but as political risk management instruments. Countries that can export defence technologies increase their diplomatic influence. When countries are combat-tested, their defence products gain global traction, insulating them through export diplomacy. For instance, during the 2024–25 Israel-Iran conflict, Israel's effective use of Iron Dome and David's Sling systems led to a surge in export interest from Germany, the Czech Republic, and Gulf states.

Similarly, India's Operation Sindoor in May 2025 showcased the operational maturity of the indigenously developed BrahMos cruise missiles and Tejas fighters, spurring export interest across Southeast Asia and Africa.

Such sales build political alignment, and importing nations become stakeholders in the exporter's political stability. Defence deals increasingly include co-production and long-term training contracts, which anchor bilateral relations beyond transactional terms. This pattern has been evident in the India-Philippines BrahMos deals and the Israel-Germany Arrow 3 contracts, which emerged following regional instability.

AEROSPACE AS POLITICAL RISK SHIELD

The aerospace sector has helped nations to immunise themselves against political risk. For example, aerospace influences political risk through dual-use exports, space-based systems, and regional aviation dominance.

Israel's precision airstrikes using F-35I Adirs and loitering UAVs during the 2025 Iran conflict reinforced its stature as a high-tech aerospace exporter. This led to accelerated defence procurement talks with Romania, Finland, and India to acquire or license UAV and missile tech.