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India's mega defense deals to reach $100 Billion by next decade

By SiliconIndia | Friday, 13 May 2011, 03:15 Hrs | 9 Comments

India's mega defense deals to reach $100 Billion by next decade

Bangalore: India is going full throttle as far as defense procurements are concerned in the current fiscal year. The defense budget for the year 2011-2012 has seen a hike of 11 percent of $36.35 billion from $32.74 billion of last year. The hike in the budget is to procure modern weapon systems and defense equipment. The $185 million hike in capital expenditure is an increase of 12 percent from last year and this hike will prove to be very fruitful for India as it has planned to go on a shopping spree for its big ticket combat aircrafts, light helicopters and the Ultra light howitzers.

A study by Industry body Confederation of Indian Industry (CII) and audit firm KPMG has revealed that India has signed defense deals worth nearly $25 billion in the last four years. The research also indicates that Indian defense ministry will sign more deals in future which are worth $41.99 billion reports Asian Defence News.

The Army, Navy and Airforce are given equal concern in terms of procurement of weapons. While the army and the air force will buy over $14 billion worth of platform, weapons and systems, the navy is expected to sign deals worth $13 billion. The year of 2007 saw the boom of defense products where the defense ministry spent about $17.46 billion. About $6.16 billion was spent on Navy, $420 million on army and $616 million on Coast Guard.

The year 2010 was the year of defense pacts. Indian firms got offset works which were worth around $10 billion. "Defense offset projects worth $10 billion are being negotiated, which will benefit India in terms of business and development of defense technology," Minister of State for Defense Production M.M. Pallam Raju said. Under the renewed defense procurement policy, it is mandatory for overseas firms securing Indian defense contracts to outsource 30 percent of the deal to state-run Indian enterprises and private firms as offset works.

Since the 1999 Kargil war, India has inked deals worth $50 billion to acquire fighters, warships, tanks, missiles, other weapon systems and platforms, the overwhelming majority of them from abroad. Under an assessment on the civil and military aerospace sector, India is poised to witness a growth worth $150 billion by 2030 which will import military hardware and software, according to defense production secretary Raj Kumar Singh. India will reinforce its position as the developing world's biggest arms buyer.

Recent deals by U.S. aerospace major Boeing, bagged a $170-million order, through the U.S.' foreign military sales route, to supply 24 units of Harpoon Block-II anti-ship missiles for the IAF's maritime-strike Jaguar fighter jets.

In the year 2010, three U.S. companies have hogged at least 42 percent of recent national military contracts worth nearly $8.78 billion. Boeing, Lockheed Martin and GE Aviation totally won contracts worth around $3.75 billion among 13 overseas companies that won different orders from the Government. The recent deals clinched by the U.S. companies include the P-8I Poseidon maritime surveillance aircraft from Boeing; C-130J transport planes from Lockheed Martin; GE's engines for the light combat aircraft Tejas; Harpoon anti-ship missiles and ultra light howitzers.

The defense ministry is also expected to spend about $100 billion in the next decade on acquisitions for its 1.3-million-strong armed forces that are currently going through a major modernization program.

Among the pending procurements are the 126 multi-role combat aircraft for $10.4-billion, 10 C-17 heavylift transport planes for an estimated $5.8 billion, 15 heavy-lift helicopters, 22 attack helicopters, and 197 light utility helicopters reports Aisan Defence News.

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Reader's comments(9)

1: India should go full throttle on Indegenisation plan... As a developing country who is ambitious of becoming a superpower tomorrow, Its not beneficial to depend on other countries for weapons...

Posted by:Sreedhu Nair - 27 May, 2011

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2: Is it a good idea to be so dependant on foreign
powers for yr defence. Spending astronomical amounts
is nothing to crow about.

Posted by:Arahat Devan - 18 May, 2011

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3: Why do you need that much finance for nothing? The most spending budget of the world? Why ? do you guys get share in the buying? Why dont you spend it for education and other community development

Posted by:Elango - 15 May, 2011

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4: Well, i am not sure if it's wise for India to spend billions buying arms from west. But some amount of these are required for the sake of restraint with our northern neighbour.

Who knows, this decision could be based on our northern neighbour's annual defence expenditure of $99 billion.

Last, what India needs to do is develop its own resouces to manufacture these high tech gadgets.

Mind we have an edge on software, unfortunately hard ware is no match. India needs the vision to develop its hardware on every front specially elect, mech & elctronics where we are way behind other developing counries like Malyasia & Thailand.

Time to open its door to South Korea & Japan as well for technology transfer. Balance the east & west.

Posted by:Tapan - 14 May, 2011

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5: Countries like U.S. UK, Russia and China are the major suppliers for India ? buddy india has never bought a single gun from china

Posted by:tazz - 13 May, 2011

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Good - Good,.,.,let these poor people (India) buy this non sense and tools for mistrust and let the US be rich,.,.,God bless U.S. for selling these non sense things to India and make out of them.
cheers

Haks Replied to: tazz - 13 May, 2011

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Haks, what someone like you here probably needs to buy is a Learner's Guide for Written English. It'd do you more good than you think buying arms did India. Poor people? I am an Indian but haven't taken your statement personally. What I am really interested in knowing is though how much rich can one really grow from borrowing and debts (all developed countries are part of the big mistake here), as compared to a nation that has it debts relatively under control compared to some of the countries you mentioned.

Saya Replied to: Haks - 13 May, 2011

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Well responded to Mr.Hak

Tapan Replied to: Saya - 14 May, 2011

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Well said Saya. :)

Anoop Replied to: Saya - 13 May, 2011

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