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India's Defence Sector
T
he country’s defence services include three
Armed Forces (i.e., the Army, the Navy and the Air
Force), and other Departments, primarily Defence
Research and Development Organisation (DRDO) and
Defence Ordnance Factories.
Defence Production
Defence Public Sector Units (DPSUs) continue to play
an integral part in the defence production. Defence has
for a long time been a part of the public sector since it
requires large investments and substantial research and
development (R&D) support. India maintains an extensive
defence industrial base with 39 Ordnance Factories and 8
DPSUs which are engaged in the manufacture of state-of-
the-art weapons and systems for the armed forces. Over
the years, these organisations have aimed to achieve self-
sufficiency and indigenization of defence manufacturing
in the country.
In terms of value of production, DPSUs account for more
than 65 % of the total industrial output of all defence
public sector entities in India. During 2011-12 the value of
production by DPSUs was approximately US$ 5.2 billion as
compared to about US$ 3.9 billion in 2010-11.
Defence Budgets and Expenditure
Defence allocation has been increased to Rs 495.2 billion
for 2011-12, compared to last year’s Rs 444.2 billion. The
Union Budget 2010-11 had raised the defence outlays to
Rs. 1595 billion. This represents a growth rate of a mere
3.98 per cent, in nominal terms (or 0.3 per cent in real
terms) over the previous year's allocation of Rs. 1417.03
billion, and far below the 34 per cent nominal increase
witnessed in the budget for 2009-10. The R&D allocation is
Rs. 46.40 billion for 2012-13 as against Rs 46.28 billion last
year. The net defence outlay of INR 2036 billion (USD 37
billion) for 2013-14 represents a growth of 5.31 per cent
over the defence outlay of INR 1934 billion (USD 35 billion)
for 2012-13. The defence budget for 2013-14 accounts for
approximately 1.79 per cent of the GDP.
INTERNATIONAL DEFENCE PERSPECTIVE
Global Defence Spending
Global Defence spending is expected to remain in flat
or decline in 2012, mostly as a result of reduction in the
US and rest of Europe. This is likely to be made up by the
increase in the defence budgets in China, India, Saudi
Arabia, the UAE, Japan and Brazil.
Indian industry is upbeat about the opportunities in defence and aerospace with continuous
efforts of Government to develop and fine-tune the procurement regime and industry drivers
Sateesh Kulkarni *
Newopportunities
for international
cooperation
