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While a number of military modernization programs are long pending for want of funds, analysts are of the opinion that India needs to allot more funds for the defence. While the budget 2019 to be announced on July 5 has triggered a lot of expectations from across different sectors, here we discuss why India’s defence needs more budget at this point. The latest defense budget for 2019 announced by the Modi’s government towards the end of its first tenure featured only a moderate 6.87 percent bump of $49.68 billion. Widespread beliefs say this rise is not adequate to support the modernization programs visualized by the government and also the government’s make in India initiatives for the defense requirements. Last time, a total amount of $16.91 billion was allocated for the purchase of new weapons and the other kinds of military hardware. This was a rise when compared to the $14.68 billion allotted during the previous financial year. However, there are also a number of liabilities to be addressed which might chip away the funds. Hence only a significant increase in the defense budget can adequately address the needs of the defense sector in the country. Considering the liabilities in front of the government, Amit Cowshish, ex financial advisor for the Defense Acquisition Ministry says the budget will need to raise the allotment for the defense sector significantly. If this does not happen, the Ministry will have to manage the things as it has been doing in the past. The latest allotment for the defense sector pegged at $9.6 billion is more than five times of what Pakistan is allotting for its defense sector. Pakistan’s defense budget is barely enough only to maintain its basic operations. However, considering the aspirations of the country and the zeal to modernize the military, India will need to allot more for the defense. While announcing the <keyword id="547606" type="ORGANIZATION" weightage="20" keywordseo="interim-budget">interim budget</keyword> for 2019 just before the elections, Piyush Goyal, the then Union Minister for Finance and Corporate Affairs assured that additional funds would be pooled in in order to make the country defense-prepared and also to maintain its borders. The government already has a number of commitments and liabilities in the defense sector like paying for Rafale fighters, helicopters, S-400 missile systems and warships and helicopters. Hence only a significant increase in allotment for the country’s defense will suffice the growing requirements of the military. The budget that will be announced on July 5, 2019 will be the first one to be announced by Nirmala Sitharaman, the new finance minister who takes charge after being the defense minister during the last tenure of the BJP government. Hence we can expect that she is familiar with the real needs of the defense sector and so she could have given her best in the budget to address the growing needs of the defense sector in the country. We need to wait and see if this assumption comes true by way of the military sector receiving more funds in the full budget 2019.

Why India's defence budget needs more money

India's defence budget has seen a small increase

Piyush Goyal: Defence budget at a record high at over ₹3 trillion for 2019-20 announced Industry experts point out that India’s defence budget 2018 compares with the top five in the world. In fact, it overtook that of UK’s for the first time in history, says a report by a global think-tank based in London. These studies mark a major change in the military priorities of the country and a major shift in the military balance between the two countries under citation. In 2017, India overtook the UK and became the fifth largest spender on defence in the world by allotting $52.5 billions, which was up from the $51.1 billion allotted in the budget 2016. These figures are brought out for a comparative study by the Military Balance Sheet 2018 report released by the International Institute for Strategic Studies (IISS). Presenting a sharp contrast, the UK’s defence budget showed a fall from $52.5 billion in 2016 to $50.7 billion in 2017. Commenting about the trend noticed with regard to the defence budgets of India and UK, IISS Senior Fellow for South Asia, Rahul Roy-Chaudhury says, "This represents a key shift in the military balance between India and the UK, with India allocating more capabilities to develop its regional resources than the UK in a global context." The report also notes that while India is seen investing a great deal to modernize its military capabilities and infrastructure, China, the globe’s second largest defence budget following the US is seen far ahead of the march allotting three times more resources to its military augmentation at $150.5 billion. The real spending of China on its defence capabilities shows a phenomenal increase of 25% percent in 2016-17 while that of India increased only by 2.4% Roy-Chaudhury notes, "Post-Dokalam, India's military balance with China continues to be significantly in China's favor. Since 2000, China has built more submarines, destroyers, frigates and corvettes than Japan, South Korea and India combined. China will continue to dominate the region militarily and seek to challenge the US in the region as well.” Analysts say that the Chinese army has recruited more than 600,000 personnel than that of India. The Chinese air force has about 1,200 tactical air crafts to compare with just 785 reported to be part of the Indian air force. China has 55 more frigates, cruisers and destroyers than India. IISS says, "The overall capability of the (Indian) army is limited by inadequate logistics, and shortages of ammunition and spare parts. Development and procurement programs across the services are aimed at replacing ageing equipment, but many projects have experienced significant delays and cost overruns, particularly indigenous systems.” To sum up, the report has found that China and Russia with their fourth largest <keyword id="107484" type="PERSON" weightage="20" keywordseo="defense-budget">defense budget</keyword> of the world at $61.2 billion seem to challenge the US’s military supremacy. Hence the US and its allies can no longer depend on the strategic advantage they have been enjoying so far. Saudi Arabia’s defence budget is at an annual spending of $76.7 billion, which becomes the third topmost spending in the whole world. So, to position India’s defence spending among the world’s topmost defence budgets, we can line up the countries in the fashion: US, China, Saudi Arabia, Russia and India.

India Defence budget at a record high at over ₹3 trillion for 2019-20 announced

India and <keyword id="826007" type="UNKNOWN" weightage="20" keywordseo="the-Maldives">the Maldives</keyword> today decided to deepen bilateral ties, especially in the critical sector of defence and security. Visiting Maldivian Defence and National Security Minister Adam Shareef met his Indian counterpart <keyword id="6363133" type="PERSON" weightage="20" keywordseo="Manohar-Parrikar">Manohar Parrikar</keyword> here this evening and held delegation-level talks during which it was decided that the two nations should deepen and broaden their defence cooperation, official sources said. 

	The development comes at a time when the Chinese are increasing their footprint in the archipelago nation.
 China is <keyword id="6357455" type="EVENT" weightage="20" keywordseo="Funding">funding</keyword> several infrastructure projects across the Maldives. The governments electoral pledges, like building a bridge between capital Male and the airport island of Hulhule and development of its main international airport, also hinges on soft loans being considered by Beijing. 

	Chinese businesses, mostly state-owned corporations, have recently forayed into the Maldives with investments in areas such as the upmarket luxury tourism industry.
 

	The Maldives also held its second investment forum in the Chinese capital last November.
 External Affairs Minister <keyword id="6355111" type="PERSON" weightage="20" keywordseo="Sushma-Swaraj">Sushma Swaraj</keyword>, during her visit to Maldives in October 2015, had said that India will always be the net security provider to the <keyword id="12350" type="ENTERTAINMENT" weightage="20" keywordseo="Indian-Ocean">Indian Ocean</keyword> archipelago. 

	She, however, had stressed that it was important to insulate both nations from trends towards radicalisation and terrorism. 
	 
	(Image credits: PIB)

Ahead of Budget, India-Maldives to deepen defence, security ties

Minister of State for <keyword id="32723" type="COMPANY" weightage="20" keywordseo="Defence">Defence</keyword> Subhash R Bhamre indicated the Indian government may cut the <keyword id="45134" type="UNKNOWN" weightage="20" keywordseo="Defence-budget">defence budget</keyword> by half within a decade. 
 
Bhamre said around $14 billion worth of defence offset obligations would be discharged in India by foreign original equipment manufacturers (OEMs) by 2028 and the defence industry has the potential to become a huge foreign exchange earner and also lead the country to its professed goal of self-reliance. 
 
"Nearly $14 billion worth of defence offset obligations will be discharged by the foreign OEMs by 2028," he said. 
 
Bhamre said India spends approximately 40 per cent of its total defence budget on capital acquisitions, and about 60 per cent of defence requirements are met through imports. 
 
"The present government has emphasised on indigenous manufacturing to reduce the defence budget by 50 per cent within a decade," the Union minister said. 
 
"There is an urgent need for innovation in the defence manufacturing sector with increased focus on R&amp;D and to prepare a pool of human resource expertise which will help in making equipment and technologies cheaper," he said. 
 
Thanks to the Centre's 'Make in India' campaign, the defence sector has moved from the periphery to the core of Indian manufacturing, he pointed out. 
 
"The sector not only has the potential to augment manufacturing but also add nearly one million direct and indirect jobs," Bhamre said. 
 
He also said the government is taking steps to bring in a framework that encourages collaboration between public and private sector companies for defence export based on public private partnership model. 
 
"The DPSUs (Defence Public Sector Undertakings) and private sector should also put in place a system to share the capability and capacity to support overseas sales, servicing and maintenance throughout the life of the product," he said. 
 
Pointing out that the human resource capacity in the private sector has already demonstrated its worth in fields of automobile, IT and service sectors at global platform, he said the government is trying to replicate the same model by inducing private sector and foreign OEMs to invest in defence manufacturing.

India may cut defence budget by 50% within a decade

<ul><li>The union budget will be presented in the parliament on July 5, 2019. </li><li>The defence forces are hopeful of increased budget allocation as Smt <keyword id="129243" type="PERSON" weightage="20" keywordseo="Nirmala-Sitharaman">Nirmala Sitharaman</keyword> herself is the former defence minister. </li><li>India is the <keyword id="7821032" type="UNKNOWN" weightage="20" keywordseo="fourth-largest-defence-spender">fourth largest defence spender</keyword> globally.</li></ul>The <keyword id="112134" type="COMPANY" weightage="20" keywordseo="Indian-Armed-Forces">Indian armed forces</keyword> expect the Union Budget 2019, to be announced on July 5, to provide more money to modernise and upgrade the country’s defence establishment amidst ever-increasing global and internal challenges. Fuelling this hope is the fact that the newly-appointed Finance Minister Nirmala Sitharaman was in charge of the defence ministry in her last role and therefore, she would be well aware of the challenges and requirements of the forces. The defence budget has increased nearly doubled in the last five years, the first term of the Narendra Modi government. But the money was still not enough to upgrade the weapons because the lion’s share of the allocation for the ministry of defence (MoD) goes into paying salaries and pensions. 
 
 
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 The Indian army has the largest share in the defence budget, more than half. Second in the list comes that <keyword id="15141" type="COMPANY" weightage="20" keywordseo="Indian-Air-Force">Indian Air Force</keyword> followed by the navy, DRDO and ordnance factories. 
 
 
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 INDIA’S GLOBAL RANK In 2018, India became the fourth largest military spender in the world, with the United States of America, China and Saudi Arabia ahead in the list and France at the fifth spot. Global military expenditure also grew 2.6 % to $1.8 trillion in 2018 compared to a year earlier, according to the Stockholm International Peace Research Institute (SIPRI). India’s defence allocation grew 6.5% in the year ending March 2019. Geopolitical tensions are rising around the world- tensions between the <a href="https://www.businessinsider.in/Simple-economics-show-how-Trump-is-beating-up-on-Iran-without-firing-a-shot/articleshow/69934762.cms">US and Iran</a>, simmering conflict in <a href="https://www.businessinsider.in/It-looks-like-the-US-has-been-quietly-lowering-the-threshold-for-conflict-in-the-South-China-Sea/articleshow/69832087.cms">the South China sea</a>, the constantly <a href="https://www.haaretz.com/middle-east-news/.premium-the-iran-crisis-is-exposing-a-far-deeper-conflict-between-trump-and-europe-1.7427507">volatile middle east</a>, and last but not the least <a href="https://www.businessinsider.in/if-india-and-pakistan-have-a-limited-nuclear-war-scientists-say-it-could-wreck-earths-climate-and-trigger-global-famine/articleshow/68207655.cms">India’s own conflict with Pakistan</a> and the <a href="https://www.businessinsider.in/Tensions-are-still-simmering-a-year-after-the-worlds-2-biggest-countries-almost-clashed-over-a-border-at-the-top-of-the-world/articleshow/65507895.cms">threats from China</a>, make the modernisation of India’s military necessary. 
 
 
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 Vintage weapons In 2018, the then Vice Chief of Army Lt Gen Sarath Chand said that 68% of the Army’s equipment is in the ‘<a href="https://www.rediff.com/news/report/sixty-eight-per-cent-of-armys-equipment-is-in-vintage-category/20180313.htm">vintage category</a>’, adding fund crunch will also impact the serviceability of the existing equipment and may even affect payment of instalments for past purchases. It had set up of the Special Forces Division, Defence Cyber Agency, the Defence Space Agency and the Defence Space Research Agency (DSRA). It also came up with the concept of <a href="https://www.businessinsider.in/indian-army-is-setting-up-integrated-battle-groups-along-the-pakistan-border-which-will-be-self-sufficient-to-fight-a-war/articleshow/69884097.cms">Integrated Battle Groups (IBGs)</a>. Insufficient allocation will hit its modernisation at a time when Chinese military is competing to reach the level of the US and Pakistan bolstering capability of its forces, the Army had told a <a href="https://economictimes.indiatimes.com/news/defence/parliamentary-standing-committee-criticises-govt-for-inadequate-allocation-of-funds-to-army/articleshow/67427334.cms?from=mdr">parliamentary panel</a>. SEE ALSO: <a href="https://www.businessinsider.in/indian-army-is-setting-up-integrated-battle-groups-along-the-pakistan-border-which-will-be-self-sufficient-to-fight-a-war/articleshow/69884097.cms">Indian Army is setting up ‘Integrated battle groups’ along the Pakistan border which will be self-sufficient to fight a war</a>

India’s defence budget has nearly doubled in 5 years but the money is not enough to upgrade the weapons

India increased its military expenditure for FY2014-15 to Rs 2.29 lakh crore - an increase of 12.5% over the previous financial year. In his maiden budget, <keyword id="6355261" type="POSITION" weightage="100" keywordseo="Finance-minister">Finance Minister</keyword> <keyword id="42575" type="PERSON" weightage="100" keywordseo="Arun-Jaitley">Arun Jaitley</keyword>, who also holds the <keyword id="32723" type="COMPANY" weightage="100" keywordseo="Defence">defence</keyword> portfolio, allowed up to 49% foreign direct investment (<keyword id="44528" type="ORGANIZATION" weightage="100" keywordseo="FDI">FDI</keyword>) in defence to boost the development of indigenous hardware. 
 
Jaitley allocated Rs 5,000 crore more than the Rs 2.24 lakh crore allocated in the interim budget presented by the UPA government in February. The defence sector was allocated Rs 2,03,672 crore in FY2013-14. 
 
The finance minister raised the FDI cap in the defence sector from 26% to 49% to attract investments from global arms firms. 
 
"There can be no compromise with the defence of our country. I, therefore, propose to allocate an amount of Rs 2,29,000 crore for the current financial year for defence," Jaitley said in his budget speech in the Parliament. 
 
"Modernisation of the armed forces is critical to enable them to play their role effectively in the defence of India's strategic interests. I, therefore, propose to increase the capital outlay for defence by Rs 5,000 crore over the amount provided for in the Interim Budget," he said. 
 
India has been repeatedly expressing concern over China's rapid development of rail and road infrastructure along the disputed border, including those in Arunachal Pradesh. 
 
"Our domestic manufacturing capacities are still at a nascent stage. We are buying substantial part of our defence requirements directly from foreign players. Companies controlled by foreign governments and foreign private sector are supplying our defence requirements to us at a considerable outflow of foreign exchange," said Jaitley. 
 
"Currently we permit 26% FDI in defence manufacturing. The composite cap of foreign exchange is being raised to 49 per cent with full Indian management and control through the FIPB route," he said.

Jaitley Gives FDI Push To Defence

<ul><li>Earlier today, the Chinese government predicted that its economy would grow in the range of 6-6.5% in 2019, a decline over the 6.6% growth it posted in 2018. </li><li>Concurrently, the Chinese government plans to hike defence spending by 7.5%. </li><li>The spending hike will take China’s <keyword id="6359526" type="UNKNOWN" weightage="20" keywordseo="military">military</keyword> <keyword id="6358021" type="ORGANIZATION" weightage="20" keywordseo="budget">budget</keyword> this year to 1.19 trillion yuan ($177.5 billion). </li></ul>Earlier today, the Chinese government predicted that its economy would grow in the range of <a href="https://www.scmp.com/economy/china-economy/article/2188625/china-lowers-2019-gdp-growth-target-6-65-cent-range">6-6.5% </a>in 2019, a decline over the 6.6% growth it posted in 2018 which, incidentally, was the slowest GDP growth it recorded <a href="https://edition.cnn.com/2019/01/20/economy/china-economy-q4/index.html">since 1990</a>. Concurrently, the Chinese government plans to hike defence spending by a higher rate - <a href="https://www.reuters.com/article/us-china-parliament-defence/chinas-defense-budget-rise-to-outpace-economic-growth-target-idUSKCN1QM03Y">at 7.5%</a>. According to the Chinese government, this is a <a href="https://www.aljazeera.com/news/2019/03/china-defence-spending-increase-190304053554047.html">“reasonable and appropriate”</a> increase in light of national security interests and military reforms. While this is a slower rate than last year’s 8.1% hike, it still represents a considerable jump over growth and overall spending estimates. The spending hike will take China’s military budget this year to 1.19 trillion yuan ($177.5 billion). To put this number into perspective, <keyword id="3658" type="COUNTRY" weightage="20" keywordseo="India">India</keyword>’s defence spending this year of <a href="https://www.indiabudget.gov.in/ub2019-20/bs/bs.pdf">₹3.18 trillion </a>($45 billion) - its highest outlay ever - is a mere quarter of this figure. In turn, China’s defence spending is a quarter of the US government’s planned outlay. The Trump administration has backed a defence budget of <a href="https://in.reuters.com/article/usa-trump-military/trump-backs-750-billion-defense-budget-request-to-congress-official-idINKBN1O906V">$750 billion</a> for 2019. China’s increased military spending this decade (2011-2015 had seen double-digit hikes in China’s defence budget) to bolster its <keyword id="42407" type="ORGANIZATION" weightage="20" keywordseo="Navy">navy</keyword> and air forces has irked its neighbours and countries in the West, especially as it has come along with expansionism in the Indian Ocean and the South China Sea. The country does not provide a breakdown on where its defence spending goes, which has further riled neighbours like Japan, who, <a href="https://www.businessinsider.in/India-is-beefing-up-its-navy-to-counter-Chinas-increasingly-powerful-fleet/articleshow/66978597.cms">like India</a>, <a href="https://www.theguardian.com/world/2018/dec/18/japan-beefs-up-defences-amid-concerns-over-chinas-military-might">boosted its own military budget</a> to counter China’s territorial incursions in Asian waters. SEE ALSO: <a href="https://www.businessinsider.in/to-understand-why-chinas-looking-so-ugly-youve-got-to-look-at-what-happened-to-chinese-consumers/articleshow/67664373.cms">To understand why China's looking so ugly, you've got to look at what happened to Chinese consumers</a> <a href="https://www.businessinsider.in/India-is-beefing-up-its-navy-to-counter-Chinas-increasingly-powerful-fleet/articleshow/66978597.cms">India is beefing up its navy to counter China's increasingly powerful fleet</a> <a href="https://www.businessinsider.in/india-overtakes-china-to-become-the-worlds-fastest-growing-economy-in-q1-2018/articleshow/65653486.cms">India overtakes China to become the world’s fastest growing economy in Q1 2018</a>

China ramps up military spending — and it’s now nearly four times India’s outlay

Indians can expect a chaotic budget session of Parliament as both the government and the opposition are ready with fresh ammunition to accuse each other of corruption. The government auditor-- the Comptroller and Auditor General of India-- is <a href="https://www.indiatoday.in/india/story/rafale-cag-report-budget-session-1442457-2019-01-30" data-type="tilCustomLink" target="_blank">reportedly</a> ready to table its report on the controversial deal to procure 36 Rafale aircraft from France. While the opposition parties were waiting to grasp an opportunity to tarnish the Narendra Modi government’s image, the latter has managed to turn the tables. News agencies <a href="https://economictimes.indiatimes.com/news/politics-and-nation/agustawestland-co-accused-rajeev-saxena-brought-to-india/articleshow/67761301.cms">reported</a> late on Wednesday that government investigators have managed to bring back key accused in older scandals, still under investigation, that would corner the opposition Congress back into the defensive. Rajiv Saxena, the <a href="https://economictimes.indiatimes.com/news/defence/five-things-to-know-about-agustawestland-vvip-chopper-scam/articleshow/51992563.cms" data-type="tilCustomLink" target="_blank">co-accused</a> in the ₹3600 crore AgustaWestland helicopter deal, has been extradited to India from United Arab Emirates (UAE) on Wednesday, news agency ANI reported. Media reports also claimed corporate lobbyist Deepak Talwar, an accused of money laundering, has also been extradited. Both are expected to reach India tonight (January 30). Both Saxena and Talwar are accused of receiving kickbacks and laundering money to enable corrupt deals, including those in the defence sector, during the regime led by Congress, preceding the current administration under Prime Minister Narendra Modi. On the other hand, the incumbent government is battling charges of corruption in an airline deal of its own, the decision to buy Rafale aircraft from French company Dassault. The price for 36 aircraft purchased by the Modi government in 2016 was allegedly 40% higher per aircraft than what Dassault initially offered for 126 Rafales back in 2012, according <a href="https://ajaishukla.blogspot.com/2018/11/iafs-36-rafales-cost-40-per-cent-more.html" target="_blank">to a report published in Business Standard</a>. It's election year and both the government and its rivals have sensational scandals involving the country's defence to attack each other with. The result may be chaotic to say the least.

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Why India's defence budget needs more money

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India’s defence budget has nearly doubled in 5 years but the money is not enough to upgrade the weapons

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China ramps up military spending — and it’s now nearly four times India’s outlay

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