Need to protect strategic interests

As one of the leading importers of defense equipment and facing war threats from China and Pakistan on its borders, India’s defence expenditure is projected to increase to US$104 billion in 2024 from US$68.4 billion in 2020.

The Defence Ministry is expected to invest in conventional submarines, multi-role aircrafts, corvettes, tanks, artillery guns, Multi Barrel Rocket Launchers (MBRL), helicopters, nuclear submarines, surface-to-air missiles, Unmanned Aerial Vehicles (UAV) and frigates among others, said a report “The Indian Defense Market – Attractiveness, Competitive Landscape and Forecasts to 2024”.

In 2019, the expenditure was US$45.4 billion, up from US$33.8 billion in 2015.

India’s defense expenditure is anticipated to register a CAGR of 9.11% over the forecast period 2020-2024.

Historic data shows that the average capital expenditure allocation of the total Indian defense budget was 32.2%, and the allocation is expected to decline marginally during the forecast period to an average of 32.1%.

The growth in the Indian defense expenditure is mainly fueled by the need to secure its strategic interests while facing the rise of China, said the report added to ResearchAndMarkets’s offering on 16 Dec 2019.India shares a 3,323 km long land border with Pakistan, and an even longer 3,488 km border with China. It has territorial disputes with both countries over the ownership of the Northern State of Kashmir and the North Eastern State of Arunachal Pradesh.

The robust growth in Indian defense expenditure can thus be attributed to the precarious geo-strategic scenario and myriad of strategic challenges that continue to erode India’s strategic advantage over its adversaries.

Between 2014-2018, India was ranked as the second largest importer of defense equipment, behind only Saudi Arabia. The acquisition of defense equipment is mainly driven by the need to gain a significant technological advantage over Pakistan, while retaining a level of strategic parity with respect to China.

Over the period 2015-2019, the country invested a total of US$60.9 billion in homeland security, which is expected to increase to US$84.5 billion over the forecast period.

Due to the nature of the security threats facing India, the main opportunities for growth in homeland security are expected to be in border security, police force modernization, aviation, mass transportation, and maritime security markets.

Pakistan has rejected the line of control (LoC) becoming an actual demarcated border between India and Pakistan, and China refuses to accept the McMahon Line as the demarcated border between the two countries and continues to stake claim over Arunachal Pradesh, which it deems to be an extension of the Tibetan Plateau.

Indian strategic concerns mainly revolve around the containment of the expanding Chinese influence in South Asia and the Indian Ocean Region (IOR), while preventing both China and Pakistan from forcefully changing the status-quo along the Indian frontiers.

Tags: Ministry of Defence ResearchAndMarkets