The Deloitte-CII report titled “Prospects for Global Defence Export Industry in Indian Defence Market” reveals that Indian defence expenditure in the next couple of decades will overtake that of major western nations like the US.
The report states that India’s current defence expenditure of $32.03 billion will rise to an estimated $42 billion by 2015. The capital expenditure on new weapons platforms will rise from the current $13.04 billion to $19.2 billion in 2015.
The Deloitte- CII report indicated that the growing trend in the defence expenditure and its sheer volume is expected to create new opportunities for foreign firms, as total spending will grow in absolute terms. India is also host to a mature manufacturing sector, which means it will often be able to offer more cost-competitive terms for large platform builds.
The reports stated that in terms of the current five year defence expenditure plan (2007-12), India will be spending $100 billion on weaponry which will be hiked to $120 billion in the following five year plan. The report has also warned that the Indian Defence Ministry’s ambitious plan of achieving 70 per cent indigenisation in defence will only become a possibility by 2015 if the capacity of the local industries is doubled. Currently, Indian companies supply only 30 per cent of the requirements and the bulk of that are components and sub-assemblies to public sector firms. In real value terms, 70 per cent of the acquisitions are from international sources.
The Deloitte-CII report has highlighted the retarded pace of Indian Army’s Artillery Modernisation programme which seeks the procurement of roughly 3,500 guns of various kinds like towed and wheeled 155mm guns, self-propelled tracked and wheeled guns as well as mountain guns.