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Growing Indian Defense Budget

Wednesday, April 25th, 2012
sea king

A Naval Commando slithering from a Sea King helicopter, during the Naval Exercise TROPEX-2012, off Vishakhapatnam on February 08, 2012.

India’s defense budget has shown a substantial increase in the past five years, according to defense experts and analysts. Following the recent budget announcement by the Defense Minister A. K. Anthony, for the fiscal year 2012, the focus returns to India’s growing defense spending. In a recent announcement in the Indian Parliament, the Minister said that India’s defense expenditure in the last decade has amounted to US$98.35 billion.

The growth in allocation of funds towards building defense resources has been in discussion over the past few years and it has become the center of several debates following a study led by the Confederation of Indian Industry (CII) and KPMG, a global auditing firm.

The study reports that in the past four years, the country has spent nearly US$25 billion on acquiring defense equipment from global sources. The research also notes that the defense ministry will continue to forge new deals through the next couple of years as well, spending nearly US$41.99 billion.

Defense experts and strategic analysts also endorse the likely hike in Indian defense expenditure over the next ten years and predict that spending will double as India needs to completely replace the nearly 20-year old equipment, commissioning the latest defense systems that include advancing technology.

The spectrum of defense spending would typically include: heavy-lift aircraft, submarines, attack helicopters, 155mm howitzers and warships.

Defense Spending in the Past Decade

India has over the past ten years spent extensively on equipping India’s forces with aircraft, warships, arms, and radars from Russia, the US and European countries. These deals have included buying US$2.1 billion worth of reconnaissance aircraft from Boeing, the leading US-based aerospace supplier; a whopping US$4.1 billion worth of medium range missiles from IAI (Israeli Aerospace Industries) and nearly US$965 million on upgrading the MiG-29 series with Russian Aircraft Corporation. Poseidon P-8I patrol aircraft for the Navy, costing US$2.1 billion for eight such aircraft, were purchased in 2009, while a further four costing US$1 billion are being approved and waiting for shipment.

Reasons Why India is Bolstering its Defense Forces

India’s defense expenditure has shown a four-fold growth in the past decade, revealing the nation’s aspiration to meet certain short-term and long-term goals. The immediate and most compulsive reason is the nearly 70 percent redundancy factor in defense equipment. Across all the three defense forces, equipment has become obsolete, ineffective and does not match the real-time manoeuvrability required to protect the nation’s borders high-up in Himalayan altitudes or preserving the coastlines along the Eastern and western coasts.

India’s security concerns along Pakistani borders are paramount with regard to India’s defense ministry investing in acquiring sophisticated surveillance and deep-penetration equipment to protect and secure India’s borders.

Another very important long-term goal that India will satisfy by acquiring a new arsenal array is to build up an impregnable military capability, given the rising growth of China’s defense forces in the region and the lining up of its defense forces along India’s borders, especially along Tibet.

The third long-term goal for defense spending is Homeland Security. Laxman Behera, a leading name in defense analysis and a research fellow at Indian Defense Strategic Affairs, says that, “Homeland security’s budget was US$4.4 billion last year. Internal security has urgent needs that cannot wait. Overall, we are compelled to modernize forces including the police.”

Soon to be Purchased Equipment

Analysts predict that in the next few years, the Defense Minister will go on a massive upgrading spree, replacing India’s decades old, and technologically-defunct equipment in a phased manner, and that defense-related spending will be in the region of close to 2.5 percent of GDP. With the aim of modernization, India is thus poised to become the world’s foremost defense consumer, reaching stupendous figures of $200 billion spent just on acquiring new defense systems. Preliminary surveys covering expenditure growth from 2001 to 2012 shows a massive four times increases in defense spending by the nation.

Heading this list is a yet-to-be finalized US$10.4 billion deal to purchase the MMRCA (multi-medium role combat aircraft), a total of 126 such machines for the Indian Air Force. Other expenditures in the pipeline include Hawk Advanced Jet Trainers, Super Hercules (C-130J) as well strategic transport aircraft like airlifting C-17, likely to cost the exchequer US$36.3 billion for the 2011-2012 fiscal year.

In the next few years India will invest heavily in buying advanced technology equipment for all the three defense forces. First on India’s shopping list is the E-2 Hawkeye aircraft, a state-of-the-art advanced aircraft with some of the most sophisticated detection technologies such as radar system that can cover territories 300 percent more than existing radar systems. These are expected to be more advanced than the Northrop Grumman E-2D Advanced Hawkeye aircraft used by some of the leading defense forces in the world. The sophisticated E-2 alone is likely to cost US$232 million.

India Alluring Market Space for Defense and Aerospace Companies

India is today a dream destination for most defense and aerospace companies based in Europe, Russia and the US. While most of them have already provided India with their latest defense equipment, some of the nation’s expenditure includes upgrading of modern aircrafts and equipment. Heading the list are the 51 Dassault Mirage jet, which though finalized in 2011 with a down payment is now completed with the payment of US$2.4 billion. Dassault and another company Thales will now upgrade equipment of the aircraft and will include latest changes to upgrade them to match the latest 2000-5 regulations. Further upgrades will include the Thales RDY2 multimode radar, to include advanced navigation systems electronic measurement calibrations for faster assessment.

Rafale, one of the premier defense equipment companies, will offer its MPDU mission computer for installation on the Mirage aircraft. In fact, Rafael is expected to work more closely on several other defense projects. Contracts have been drawn to include Rafael Advanced Defense System’s medium-range air-to-air missile with Tejas light combat aircraft, one of India’s indigenous combat aircraft series. It is expected that this new equipment integration will increase the Indian Navy’s aircraft Harrier FRS51 prowess, as they will now allow allweather, infrared-guidance as well as activeradar guidance.

The Defense Ministry also stated in the Parliament recently that priority was being “given to ensure that artillery units are equipped with modern weapons.” The latest array of equipment for the Army is likely to be in the region of US$13 billion and will provision for the increase in soldiers, about 90, 000, for four new divisions being planned for stationing along Chinese borders.

Making an announcement at Hyderabad’s Aviotech, an aerospace space division, Rahul Gangal says that, “The army will purchase 2,600 vehicles as part of its future combat vehicles program, and it is likely to see strong public and private sector participation from ordnance board and industry players such as Tata Group.”

The Navy too is likely to include a refitted aircraft, INS Vikramaditya, and will add nine other surface warships to its fleet. Reports quote that these will include the Shivalik-class frigate, the Kolkata-class destroyer, an antisubmarine warfare corvette, offshore patrol vessels, two Talwar-class frigates from Russia, three catamaran survey vessels, and 25 fast interceptor craft.

Further reports from the Defense Research and Development Organization say that, “the organization is likely to spend around US$4 billion over the next three years on locally manufactured strategic and tactical missiles, including the Astra air-to-air missile, BrahMos supersonic cruise missile, Akash surface-to-air missile and the Shourya ballistic missile. Also scheduled for production are 1,100 Pinaka rockets, 1,000 84-mm rocket launchers and 7,500 missiles.”

Though the government has made the necessary allocations, the ministry has failed to utilize all the annual funds, says a recent new report. The reason for non-utilization has been the complex procurement process which has caused delays in implementing long-term plans. Delays have resulted in cost-escalation as well as lower-generation technology equipment.

However, in the past few months, a fast-paced process has been adopted to optimize procurement of equipment leading to not only immediate commission of some vital defense spending but which has also resulted in India’s defense forces, in small parts and sections, being equipped with advanced and sophisticated equipment that are not only safe and secure for Indian forces but which incorporate the latest technologies as well. Poised to become a super-power, India is backed by well-defined borders and it is mandatory that it defends its borders to prove its sovereignty. It is critical to the region that India has the military capability to intervene and pledge support to smaller neighbors in the region. Hence, India is compelled to spend more than 2.5 percent of its annual GDP to maintain its defense capability in order to continue to be a powerful military force. Ironic though it may seem, this spending is being done to maintain balance of power in the region, as India continues to be a forceful advocate of World Peace.

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