India’s defence budget overtook the UK for the first time in 2017 to be counted among the world’s top five.

Indian Army. ©PABy Rahul Roy-Chaudhury, Senior Fellow for South Asia 

India’s actual spend of $52.5 billion (including defence pensions) in 2017 makes it the fifth-largest in the world, overtaking the UK to reach the ‘Top 5’ slot for the first time, according to the authoritative annual ‘Military Balance 2018’ published last month by the International Institute for Strategic Studies (IISS), the London-based think-tank I work for.

According to the IISS, India’s actual spend in defence is the largest after the United States ($602.8 billion), China ($150.5 billion), Saudi Arabia ($76.7 billion) and Russia ($61.2 billion). Since Prime Minister Modi took charge, it has risen from $45.2 billion in 2014, when it was the eighth-largest, to become the fifth-largest in 2017. This jump in ranking primarily reflects a relative decrease in defence spending by the UK, France and Japan; in 2017, for example, the UK’s defence spend decreased to $50.7 billion from $61.8 billion in 2014. Tense relations with India’s two largest neighbours, China and Pakistan, requiring preparation for a ‘two front’ conflict as indicated recently by India’s Army chief, as well as an expanded role for India’s Navy in the Indian Ocean, entail the modernisation and enhancement of the operational capability of the armed forces.

My colleague Antoine Levesques, IISS Research Associate for South Asia, also notes a key challenge. With the notion of the Indian defence market changing under the Modi government, there is now greater interest in “government-to-government defence contracts set in the context of India’s most important strategic partnerships”. In effect, despite ‘Make in India’ in defence, “foreign procurements are no longer a last resort”, he writes. However, going forward, a useful model for implementation could be a government-to-government sale with possibly a Make in India component – like the government's recent acquisition of M777 howitzers.

Read the full article at India Global Business.

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