India's Affordable Defence Spending

Defence expenditure is an important component of national security and every country allocates a significant portion of its resources for this purpose. However, given the scarcity of resources and the competing demands from other sectors, a nation’s ability to meet all its Defence requirements is not unlimited. Even the United States, the only military superpower, is unable to afford many of its major programmes, forcing it to scale down the number of items to be procured. The sheer size of the Defence budget and its impact on other sectors of the economy thus, more often raises the question as to how much a country can afford for its Defence.

For complete analysis see Journal of Defence Studies, Vol. 2, Issue 1, Summer 2008, http://www.idsa.in/jds/2_1_2008_IndiaAffordableDefenceSpending_LKBehera

Tata’s Forays into Defence Production

In early May 2008 Tata Group of India and Israel Aerospace Industries Ltd (IAI) signed an agreement to establish a joint venture (JV) in India to develop, produce and support defence products such as missiles, unmanned aerial vehicles (UAVs), radars, electronic warfare (EW) systems and homeland security (HLS) systems. The agreement is in sync with Tata’s broader objective of becoming a “lead system integrator” in the Indian private sector, by consolidating its own resources, diversifying into various fields of production and forging partnerships with major global defence companies. While Tata’s foray into defence production bodes well for the industry at large, it also has larger implications for state enterprises.
For complete article click http://www.idsa.in/idsastrategiccomments/TatasForaysintoDefenceProduction_LKBehera_170608

The Great Indian Arms Bazaar*

By Laxman Kumar Behera

The DefExpo 2008, the fifth biennial defence exhibition on land and maritime systems held recently in New Delhi, conveyed most emphatically India's growing clout in the international arms bazaar, albeit mostly as a buyer. The exhibition, which saw a record 475 participants, including 273 foreign companies from over 30 countries, was in full swing for four days and had global biggies showcase the comparative advantages of their products. With India emerging as a major customer with considerable financial power, the global companies left no stone unturned to make India a partner in their ventures to access its huge arms bazaar.

Gone are the days when India, constrained by limited resources and Cold War politics, depended significantly on the single-source, 'cheap' Soviet-era weaponry for its armoury. With the end of Cold War and the global political realignment, especially post-9/11, Indian security requirements are no longer viewed adversely by the West. The impressive growth story of the Indian economy and its global character have favourably moulded the West's perception of India, which increasingly sees its security interests broadening as the economy goes global. Indian policy makers, for the first time, feel an urgency to protect the country's economic interests through a concomitant enhancement of its military might. This is reflected by the continuous upward movement in recent years of India's defence and more importantly modernisation expenditure on its armed forces. The modernization drive of the security infrastructure, backed by the country's ability to pay, has seen India spending more than Rs. 80,000 crore on procurement of defence items in the last three years. Besides, if all future plans materialize then the total procurement budget would amount to a whopping Rs. 1,88,000 crore in the next five years. The huge potential of the Indian arms market is what makes it attractive to global companies who are constrained by shrinking defence spending in their domestic markets.

Private Sector Participation in Indian Defence Industry

India opened up its defence industry to the private sector in May 2001, in a move to enhance the country’s ‘defence preparedness’. To give further impetus to this policy, the Ministry of Defence (MoD) came out with new policy measure related to the concepts of private Industry Leaders [or Raksha Udyog Ratnas (RURs)] “Make” procedure, and defence offsets, in its 2006 Defence Procurement Procedure (DPP). With these policy initiatives, the government’s focus seems to have shifted towards the private sector as far as achieving its long-cherished goal of ‘self-reliance’ is concerned.
For complete article click http://www.idsa.in/idsastrategiccomments/PrivateSectorParticipationinIndianDefenceIndustry_LKBehera_080108