Tuesday, December 28, 2010

India boosts investments

India Slates Double-Digit Spending Increase

Neelam Mathews

India is expected to increase defense spending for Fiscal 2011 (April-March 2012) by 10%, which would add approximately $3.2 billion to annual expenditures. Firm numbers will not be released until March.

Defense spending grew at a compound annual growth rate (CAGR) of 12.14% from 2005–09, and is forecast to post a CAGR of 6.59% from 2010-15, reaching $42.6 billion by 2015. This is due primarily to replacement of aging hardware and technology, fighting domestic insurgencies and countering hostile neighbors. India is one of the largest buyers of foreign defense items, with a shopping list that includes warships, fighter jets, tanks and other weapons. The planned modernization program will make it the second-highest defense spender in the Asia-Pacific region within five years, and the seventh globally by 2016, says consultant Frost & Sullivan. Nevertheless, modernization is lagging by 10 years, with 50% of equipment obsolete, says air force Chief Marshal P.V. Naik.

Short- and medium-term buys include unmanned aerial vehicles, advanced electronic warfare systems, combat systems, rocket and missile systems, fighter and trainer aircraft, stealth frigates and submarines. Investments in digital networks and communications are also expected to increase significantly, with a focus on enterprise applications, systems integration and real-time mobile communications.

Obsolete aircraft have been phased out, and other planes are being upgraded. These include such fighters as the MiG-27 and -29, Sepecat Jaguar, Dassault Mirage 2000 and Sukhoi Su-30 MKI; the Antonov AN-32 transport aircraft; and helicopters. Other aircraft, radars and missile systems are being procured in phases.

India’s homeland security budget (separate from defense) of $14.7 billion is also expected to increase. This budget includes spending for intelligence, law enforcement and counter-terrorism, critical asset and government infrastructure protection, border and perimeter security and secure networks.

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