Defence expenditure, defence economy: India

Revision as of 10:15, 12 December 2014

Defence Imports of India

India's defence imports 40 times its export basket

Rajat Pandit The Times of India Nov 29 2014

Paid Foreign Vendors Over Rs 1LCr In Last 5 Years: Parrikar

India’s major defence imports in last 5 years

Prime Minister Narendra Modi may want India to start exporting weapons in a major way instead of importing them in large numbers, but it will take a lot of doing. Latest figures show that India's arms imports are a staggering 40 times the size of its exports, and will remain so for the foreseeable future. Defence minister Manohar Parrikar has told Parliament that the total expenditure on “direct payments to foreign vendors for capital acquisitions“ for the army, navy and air force during the last five years stood at Rs 1,03,535 crore ($16.72 billion).

In sharp contrast, as per a written reply in Lok Sabha on Friday , the five defence PSUs, four shipyards and 39 ordnance factories as well as the private sector, all put together managed to export defence equipment worth just a paltry Rs 1,644 crore in the last three years. The figure in the first six months of the ongoing fiscal stands at just Rs 167 crore.

India has the dubious distinction of being the world's largest arms importer due to a stagnant defence-industrial base (DIB), which forces the armed forces to acquire 65% of their requirements from abroad.

The Modi government's rhetoric on the “Make in India“ policy with greater private sector participation in the defence production sector will take several years -if at all it does materialize on the ground. It will need sweeping systemic reforms to revive the country's DIB from its prolonged stupor.

Sources, however, said the defence ministry is now working to “streamline“ the “complicated“ indigenous defence production policy .There is an attempt, for instance, to revive the provision for the government to fund 80% of the development cost of a weapon prototype, with the industry chipping in with 20%, in “high-risk projects“.

The battle has to be fought on two fronts. First, a radical overhaul of the functioning of DRDO, defence PSUs, Ordnance Factory Board and shipyards is needed to ensure they can deliver cutting-edge weapons in a cost-effective and timely manner.

Concomitantly , the private sector has to be encouraged to enter defence pro duction in a major way .“There has to be concrete government support with confirmed orders since defence projects are capital-intensive and have long-gestation periods,“ said an officer.

India will remain strategically vulnerable till it builds a robust DIB since supplies can be choked in times of need. China has assiduously built a strong DIB, making it the world's thirdlargest arms exporter, even though it also remains the third-largest importer.

India also does not get the biggest bang for its buck.There is no concrete planning to build military capabilities, with the three Services continuing to squabble over the limited budgetary pie. Consequently , the armed forces continue to grapple with huge deficiencies in equipment.