Asia Pacific

India’s defense spending to increase over 7.8% in 2018

India’s military spending is set to increase under the 2018-19 budget unveiled on Thursday. The defense sector has been allocated 2,95,511.41 crore rupees (29 billion rupees, $454 million) – 12.10 percent of the total central government expenditure – in the budget Finance Minister Arun Jaitley presented to parliament. The budget is a 7.81 percent increase over the amount allocated for 2017-18.

Capital expenditures including defense purchases were set at 99,947 crore rupees.

A recent report from the Parliamentary Standing Committee on Defence found that the capital budget for the Indian Air Force was 46 percent lower than required, while the Army’s budget was 41 percent lower and the Navy’s was 32 percent.

NDTV reported on Wednesday that India’s $250-billion military modernization is also in trouble as Prime Minister Narenda Modi has failed to fix the country’s disfunctional defense procurement system.

Jaitley noted that the government is continuing to emphasize the military’s operational capacity, and said a number of initiatives have been undertaken to advance Modi’s “Make in India” program. India is the world’s largest defense importer, and Modi has sought to make it more self-reliant and an eventual arms exporter.

The ‘Make II’ strategy includes significant transfer of technology in defense acquisition, encouraging foreign investment in joint ventures to produce military hardware in India. Some deals have stumbled recently over the Make in India and transfer of technology conditions, including an on-again off-again purchase of Spike ATGMs from Israel.

Last month the Defence Acquisition Council agreed to simplify the ‘Make II’ procedure, which defines guidelines for the development and manufacture of defence equipment by Indian corporations.

The revised procedure will allow the Ministry of Defence to accept proposals from the defense industry, and allow start-ups to develop equipment for Indian Armed Forces. The criteria to participate in ‘Make II’ projects has also been relaxed by removing conditions related to credit rating and reducing financial net worth criteria.

Jaitley on Thursday said the government will develop two defense production corridors to support “industry-friendly” military production and the indigenous industry, DNA reported.

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