Defence Industry Minister Christopher Pyne says he wants Australia to become a major arms exporter on par with Britain, France and Germany and use exports to cement relationships with countries in volatile regions such as the Middle East.

The ambitious goal, outlined in an interview with Fairfax Media, would mean Australia not only builds but also designs major military hardware such as naval warships and possiblyeven submarines.

And he says such exports can be used to bolster military ties with key countries in the Middle East such as the United Arab Emirates, with whom Australia shares interests such as the fight against Islamic State and balancing Iran's growing power in the region.

Mr Pyne said that in an increasingly uncertain world, Australia should have greater self-sufficiency in building its defence capability. But this would also require creating an industry of a size and sophistication that can export.