The 10 per cent growth in the interim defence budget although looks impressive from outside, it has a poor outlook on the modernisation front. Much of the hike in the interim budget is consumed by the increase in salary, leaving very little to meet the defence modernisation requirements.
It is commonly viewed that in an election year, the incumbent government is tempted to present a populist budget. In that scenario, the MoD would have reasons to be unhappy, particularly so when the modernisation requirement of the armed forces has reached a stage which is now contingent upon substantial additional resources to remain on course.
The Occasional Paper examines India's defence innovation performance, especially of the Defence Research and Development Organisation (DRDO) and the defence industry. The paper argues that the innovation performance of these two players is constrained by lack of a higher organisational structure which could provide direction and required thrust to the indigenous R&D.
The Office Memorandum has created a debate among various stakeholders, particularly the Indian IT and software-related companies which see a loss of business to the tune of $10 billion.
The monograph makes an attempt to estimate India’s defence self-reliance index, which has been a subject of intense debate in recent years. It also surveys the key recommendations of various high level committees set up by the Indian government post the Kargil conflict. The monograph concludes with key policy measures to revitalize India’s moribund defence industry.
On April 20th, the Defence Acquisition Council (DAC) of the Ministry of Defence announced 15 major amendments to the defence procurement and production policies, with the hope to incentivise indigenous defence manufacturing while promoting transparency and efficiency in the procurement process.
Like many other developing counties, Brazil also believes in self-reliance in arms manufacturing and has articulated comprehensive national defence policy with a strong support of its armed forces. There could possibly be some lessons for India.
A GDP growth of less than seven per cent combined with the fiscal consolidation path that the Finance Minister has articulated in his budget speech means a lot of pressure on the defence ministry whose plan for current and future expenditure up to 2017 is based on past GDP growth rate of 8 to 9 per cent.