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Saturday, 28 February 2015

From Today's Papers - 28 Feb 2015











http://www.tribuneindia.com/news/nation/china-moots-pact-with-india-lanka/47974.html
China moots pact with India, Lanka
Beijing, February 27
China today proposed trilateral cooperation involving India and Sri Lanka for regional stability as the new government in Colombo sought to re-balance its ties with China, preferring to follow a “non-aligned” policy.
“China is open-minded about trilateral cooperation between China, India (and) Sri Lanka”, Chinese Foreign Minister Wang Yi said during a joint press conference with Sri Lankan counterpart Mangala Samaraweera.
“I want to say both India and Sri Lanka are China’s cooperative partners in South Asia”, Wang said.
Samaraweera is the first Sri Lankan official to visit Beijing since president Mahinda Rajapaksa’s defeat in polls this January. China made significant investments in Sri Lanka during Rajapaksa’s tenure, raising concerns in India.
Samaraweera’s visit to China will be followed by new Sri Lankan President Maithripala Sirisena’s next month.
The two ministers had a lengthy talk focused on the new political alignment in Sri Lanka following the fall of the Rajapaksa government. Samwarweera, however, did not comment on the trilateral proposal by China.
Wang said China wanted progress in relations among all three countries, including ties between New Delhi and Colombo.
“We believe that China and India may leverage their respective strength in playing a positive role in helping Sri Lanka advance its social development,” he said.
“I believe sounder interaction and pursuit of common interests among the three countries is in the best interest of the three countries and also in the best interest of regional peace, stability and prosperity”, Wang replied to a question.
He also said China and India stay in contact over a large number of regional and global issues.
“We would certainly like to have consultations with the Indian side regarding pursing trilateral cooperation in future or cooperation involving more parties”, Wang said. — PTI




http://www.tribuneindia.com/news/editorials/militarising-for-future/47692.html
Militarising for future
The approach is right but no clarity on costs

The Modi government has so far made the right noises about India's defence preparedness after a tepid decade that saw more tender cancellations and CBI probes than actual orders. The decision to scrap plans to make conventional submarines in favour of the harder-to-detect nuclear ones could be a game-changer for the Indian Navy. Though not equipped with nuclear missiles, these submarines don't come up for air and can therefore remain undetected for months. The government also wants to source stealth technology enabled fighters from Russia called the PAK FA which will eventually be developed into a Fifth Generation Fighter Aircraft currently produced only by the US.  If Russia accepts the request, these fighters will be much more lethal than any counterpart in India's extended neighborhood.
Both platforms will not come cheap. The cost of constructing six conventional French submarines has shot up to over Rs. 5,000 crore per piece and they are still hobbled by delays. It is anyone’s guess what the final cost of the much superior nuclear submarines will be, especially because of India’s limited capabilities in this arena. The Russian stealth fighter PAK FA is still being flight tested and there is no clarity on costs. The engine, avionics and weapons suites are under development. The maintenance cost of these fighters will also be very high as compared to the planes they are supposed to replace.
In both cases India will heavily lean on Russia though the government is bound to market them as made-in-India products. Vladimir Putin had to intervene to end the endless cycle of escalating costs for INS Vikramaditya, a much simpler platform than nuclear submarines and stealth fighters.  Russia, like all high-end weapon producers, will extract a price for India's eagerness for equipment Pakistan can only dream of and for China to sit up and take notice. Defence analysts have consistently pointed out gaps in India's defence preparedness.  They should now give a rational assessment of the costs involved and whether the Indian citizen should be expected to finance it against demands from sectors providing security of a different kind but equally important.




http://timesofindia.indiatimes.com/india/India-placed-orders-worth-Rs-83858-crore-for-military-purchases-from-2011-to-2014/articleshow/46399208.cms
India placed orders worth Rs 83,858 crore for military purchases from 2011 to 2014
NEW DELHI: India have spent big from the 2011 fiscal year to the last fiscal year on the Army, Air Force and Navy for procuring arms, weapons and other defence-related systems.

Defence minister Manohar Parrikar said the three services have placed orders worth Rs 83,858 crore. During this period, India's own defence sector earned Rs 69 crore by export of military hardware.

According to the Parrikar, the IAF placed orders worth Rs 55,406 crore to foreign companies between 2011-12 and 2013-14 while the Navy and the Army placed orders worth Rs 25,454 crore and Rs 2,998 crore respectively.

Replying to questions in the Lok Sabha, the defence minister also said that foreign direct investment amounting to Rs 24.36 crore has been received after government opened the defence industry for private sector.

"The expenditure on capital acquisition in respect of orders placed on Indian vendors and foreign vendors during the period 2011-12 to 2013-14 was 53.9 per cent and 46.1 per cent respectively," he said.

Giving details of efforts by the government to strengthen the domestic defence industry, he said a total of 144 companies have been issued licences and letters of intent for manufacture of military hardware in the last 14 years.

He said 29 joint ventures and FDI proposals have been approved while noting that the procedure for "buy-and-make (Indian) and make" categories of acquisition over "buy (global)" category to encourage Indian defence industry.

READ ALSO: Govt approves making of 7 stealth frigates, 6 nuclear subs

As per the new FDI policy in defence, foreign investment upto 49 per cent has been allowed through FIPB (foreign investment promotion board) route and beyond 49 per cent, with the Cabinet committee on security.

The defence minister said Indian private sector industry has also been allowed to receive maintenance transfer of technology (MToT) in "buy (global)" cases.

He also said that an online system of receiving application for issue of no-objection certificate for export of military stores has been introduced besides formulating a defence export strategy.

Parrikar said during the last four years, NoCs for export of goods which are in the nature of military stores have been issued for many countries including Algeria, Nigeria, Bosnia and Herzegovina, Sri Lanka, Paraguay, Japan, Afghanistan, Spain, Nepal, Belgium, Malaysia, Norwat, Romania and Port of Spain.

The NoC has also been issued for supply of such goods to Vietnam, France, UK, UAE, Bangladesh, Ghana, Sweden, Germany, Saudi Arabia, Thailand, Egypt, Brazil, Burkina Faso, Israel, Republic of Korea, Macau, Oman, Tunisia, Kazakhstan, Uruguay, Canada, Russia, Tajikistan and Singapore among others, Parrikar said.

He said Indian defence sector earned Rs 46.08 crore by exporting military goods in 2011-12, Rs 5.62 crore in 2012-13 and Rs 17.74 crore in 2013-14.

READ ALSO: Global arms majors keen on Modi's 'Make in India' thrust

The defence minister said in the last four years, orders have been issued debarring six firms along with their allied and subsidiary firms from business dealings with the defence ministry for a period of 10 years.

He said allegations of kickbacks and commissions are dealt with as per provisions of defence procurement procedure (DPP) and wherever necessary, the cases are referred to the appropriate agency including the CBI.

Replying to another question, he said a proposal to procure medium multi-role combat aircraft (MMRCA) from French firm Dassault Aviation was under consideration and no agreement has been signed yet.

India has been holding talks with Dassault for the nearly $10 billion deal for 124 Rafale fighter jets.

To a separate question, Parrikar said six Scorpene submarines are currently under construction at Mazgaon Dock Ltd, Mumbai, in collaboration with DCNS of France.

He said no proposal has been received from Japan government for construction of submarines.

"The defence acquisition council has constituted a core committee in December 2014 to identify suitable Indian shipyards for construction of submarines indigenously which is required to submit its report within three months," he said.




http://tribune.com.pk/story/844970/ahead-of-secretary-level-talks-army-chief-warns-india-to-expect-matching-response/
Ahead of secretary-level talks: Army chief warns India to expect matching response
ISLAMABAD:

As Islamabad and New Delhi prepare for foreign secretary-level talks, army chief General Raheel Sharif has warned India that Pakistan will give a ‘befitting’ response to any provocation along the Line of Control (LoC) and the working boundary.

“Let there be no doubt that any provocation along LoC and working boundary will meet a befitting response,” the military’s chief spokesman quoted Gen Raheel as saying during a visit to areas affected by Indian firing along the working boundary near Sialkot on Thursday. The statement came just ahead of a crucial visit to Pakistan by India’s foreign secretary, who is due to arrive on March 3.

The army chief termed repeated ceasefire violations by India in the recent past “an attempt to distract Pakistan from its campaign against terrorism” and stressed that such actions would have a negative impact on regional stability. According to Inter-Services Public Relations Director General Maj-Gen Asim Salim Bajwa, Gen Raheel also cautioned India that the entire Pakistani nation is united in defence of the motherland.

The army chief also met troops stationed along the working boundary and the residents of adjoining areas, and paid tribute to their resilience.

Pakistani and Indian forces stationed along the LoC and working boundary have regularly exchanged fire over the past few months and have accused the other side of starting hostilities. The border clashes are expected to come up for discussion during the Indian foreign secretary’s visit.

Speaking at her weekly news briefing, Foreign Office (FO) spokesperson Tasnim Aslam said all issues, including the longstanding Jammu and Kashmir dispute, are likely to be discussed during the meeting between the two foreign secretaries.

“We welcomed the Indian initiative. At this stage, I would not like to speculate on what the exact agenda of the talks will be,” she said. “However, whenever Pakistan-India dialogue resumes, we expect all matters would be on the table for discussion, including Jammu and Kashmir, Siachen, water resources, confidence building measures, people to people contacts and trade matters,” Tasnim added.

She pointed out that Jammu and Kashmir had been on the UN Security Council’s agenda. “We have been discussing the Kashmir issue bilaterally. The process, however, has to be result-oriented,” she said.

The Indian foreign secretary’s visit is expected to help resume the stalled peace process, which New Delhi has been reluctant to revive since Narendra Modi came to power.
https://www.ibcworldnews.com/2015/02/27/indias-military-in-crisis/
India’s Military In Crisis
The defence budget of India—the world’s largest arms importer—has more than doubled over the past decade from Rs 80,500 crore to Rs 229,000 crore for the financial year 2014-15.

Yet, the defence forces are critically short of arms, and men and women at arms.

The army, navy and air force are short of officers by 17% (7,989), 17% (1,499) and 3% (357) respectively, according to latest data tabled in the Lok Sabha. Consider the arms deficits in the three services:

–The Indian Air Force (IAF) is short of 272-306 fighter aircraft (as this IndiaSpend report explains) and 56 medium transport aircraft.

–The Indian Army needs about 3,000 to 3,600 artillery guns, 66,0000 assault rifles, 2 lakh pairs of ankle leather boots and 66,000 rounds of armour-piercing ammunition for T-90 tanks.

–The navy needs 12 diesel-electric submarines, 6 nuclear attack submarines and 7 stealth frigates.

The three defence wings also collectively need more than 1,000 helicopters. This is an indicative list: The actual list of defence requirements and shortages is longer.

Yet, the Ministry of Defence ­accounts for the second-highest share of India’s budget, after the finance ministry.

The defence budget accounts for 1.78% of India’s Gross Domestic Product (GDP) and 12.76% of total central government expenditure, said Amit Cowshish, distinguished fellow at Institute for Defence Studies and Analyses (IDSA).

The revenue-to-capital ratio of the defence budget is 60:40. Revenue expenditure is for payment of salaries and maintenance of defence bases and equipment. Capital expenditure is for equipment purchases and modernisation.

India is expected to spend Rs 94,587.95 crore in 2014-15 as capital expenditure, a 20% increase from Rs 78,872.23 crore last year.

“The requirement of funds (for defence purchases) is directly related to carried-forward committed liabilities and signing of new contracts,” Cowshish said in an email interview with IndiaSpend. As a result, the forces could expect a similar increase in the 2015-16 budget “if – and this now seems to be a big if – new projects, such as the one for a new combat aircraft, go through”.

Let us now look at sector-wise allocations of the defence budget.

Among the three defence wings, the army has consistently cornered the highest funding. In 2014-2015, It accounted for Rs 92,601.32 crore, which is 40% of total expenditure, followed by the air force and navy at Rs 20,506.84 crore (9%) and Rs 13,975.79 crore (6%), respectively.

The pension question ::

The budget allocation does not take defence pensions into account, as this is placed under a different budget head. The MoD allocated Rs 50,000 crore for defence pensions in 2014-2015, an increase of 9% from Rs 45,500 crore in 2013-14.

Last year’s budget earmarked Rs 1,000 crore for the one-rank-one-pension scheme for ex-servicemen. This might grow to an estimated Rs 8,000 crore this year, as the Times of India reported.

More than two million ex-servicemen in India have been demanding one-rank-one-pension, which ensures that the same pension is paid to personnel who have retired in the same rank with the same length of service, irrespective of retirement date.

Funding research and development ::

Investing in defence research and development (R&D) is expected to boost India’s indigenous arms industry and reduce its dependence on imports. The Indian government spent 42.7% of defence capital expenditure on arms imports in 2013-2014, according to data tabled in the Lok Sabha.

As we mentioned before, India is the world’s largest importer of arms as per Stockholm International Peace Research Institute (SIPRI), an independent international institute that researches conflicts, armaments, arms control and disarmament.

The MoD has almost doubled the capital expenditure for R&D to Rs 9,298.25 crore in 2014-2015 from Rs 5,257.60 crore in 2013-2014. Besides, the MoD has provided Rs 5,984.67 crore for salaries and maintenance of research centres.

Friday, 27 February 2015

From Today's Papers - 27 Feb 2015















http://www.defensenews.com/story/defense/land/weapons/2015/02/26/india-israel-mrsam-missile-army-air-force-air-defense/24050363/
India, Israel To Build Missile Defense System
NEW DELHI — India and Israel agreed to jointly develop a medium-range surface-to-air missile (MRSAM) system for the Indian Army to replace Russian-made air defense systems, said a source in the Indian Defence Ministry.

The land version of MRSAM would be an extension of the ongoing Air Force MRSAM project, which is expected to begin induction by 2017, three years behind scheduled. The Army has an immediate need for one regiment (18 systems) of MRSAMs at a cost of $1.5 billion, but the total requirement for these systems is estimated to be more than $6 billion, said an Army official.

The agreement to jointly develop the land version of MRSAM, which will have a range of up to 70 kilometers, emerged during a Feb. 22 meeting here between visiting Israeli Defense Minister Moshe Ya'alon and his Indian counterpart, Manohar Parrikar, the source added.

Negotiations for developing the land version had been put on hold two years ago following delays in the Air Force project. However, several rounds of negotiations between Indian and Israeli officials during the last six months have finalized the joint development agreement for the land version, the source added.

The Army mobile MRSAM systems will be jointly developed by India's state-owned defense research agency, the Defence Research and Development Organization, and Rafael and Israel Aerospace Industries (IAI) of Israel. Both sides will develop subsystems although the details of that arrangement have yet to be finalized. The system will be produced by India's state-owned Bharat Dynamics Ltd., in participation with domestic private sector companies Tata Power SED and Larsen & Toubro, the source added.

IAI has declined to comment on the program.

An Indian Army official said the service has needed a new surface-to-air missile system for more than a decade to replace Russian-made Kvadrat and OSA-AKM systems bought between 1970 and 1980.

The Army wants to use the MRSAM to defend mechanized formations operating in the plains and desert regions of the country.

In 2008, an attempt to acquire MRSAMs from the global market failed because none of the bidders qualified under India's transfer of technology requirements.

In 2009, India and Israel agreed to jointly make the air version of MRSAM, but it is still under development despite a planned delivery time of 2013-14 because of unspecified technical snags in the initial tests of the prototype, the MoD source said. First delivery is now expected by 2017, the source added.


http://www.thehindubusinessline.com/companies/belrolta-consortium-bags-50000cr-defence-project/article6937669.ece
BEL-Rolta consortium bags ₹50,000-cr Defence project
 Bengaluru, February 26: 

A Bharat Electronics Ltd-Rolta India consortium has bagged the Ministry of Defence’s (MoD) development agency order for the Battlefield Management System (BMS) project, worth over ₹50,000 crore. The BMS project, categorised as a ‘Make in India’ programme under the DPP, will be one of the largest solutions to be indigenously manufactured for the Indian Army, a press statement from BEL said.

BMS is an awareness and visualisation system that aims to optimise the effectiveness of tactical units. BEL has been working on such battlefield systems and has established a test bed for continuous evaluation and implementation of user requirements.

“This prestigious project is meant to deliver command and control capabilities to personnel operating at the battlefront, at the battalion and combat group levels,” PC Jain, Director–Marketing, BEL, said. He added: “The BE-Rolta consortium is fully geared up to take on the challenge of developing the Battlefield Management System for our Defence forces. We also aim to maximise the indigenous content through in-house development of various sub-systems.”

The company has worked on several Tactical Command, Control, Communications and Intelligence (Tac C3I) systems for the Indian Army, in association with Defence Research and Development Organisation. BEL has the capability of developing and integrating Tac C3I systems and will lead the consortium.
Significant investment

Rolta has also invested significantly in BMS technologies. Over the years, the company has delivered cutting-edge Command, Control, Intelligence, Surveillance and Reconnaissance (C2ISR) systems to the Indian forces.

KK Singh, Chairman and Managing Director, Rolta India, said: “The selection of Rolta is a strong vindication of our strategy to invest in and build word-class IP indigenously. This IP has been indigenously developed by leveraging our deep domain knowledge of C2ISR and is already in wide use across various formations of the Indian Army.”


http://www.moneycontrol.com/news/business/tata-lt-consortium-shortlisted-for-mega-defence-project_1314651.html
Tata-L&T consortium shortlisted for mega defence project

In order to give a push to government’s defence programme, the ministry has awarded battlefield management system (BMS) development contracts to two consortiums. According to sources, one comprises of Tata Power SED and L&T Defence and the other consortium includes BEL and Rolta . The government will fund 80 percent of the prototype cost and partners will be expected to fork out the remaining 20 percent. The two consortiums are required to develop the prototype in 18-24 months. Speaking exclusively to CNBC-TV18, MV Kotwal of L&T said share of Tata Power and L&T is same in the consortium. He also added that the final order win will be between one of the two consortiums. Below is the transcript of MV Kotwal’s interview with Menaka Doshi, Anuj Singhal and Varinder Bansal on CNBC-TV18. Menaka: We have some preliminary details on this big defence order of the size of Rs 50,000 crore which we understand has been bagged by two different consortia. Around 70 percent of that order has gone to a consortium between BEL and Rolta and 30 percent of that order has come to you and Tata Power as the second consortia. What details can you share with us on this front? A: Actually, this needs a lot of clarification. First of all this is not an order, it is a programme called Battlefield Management System (BMS) which is part of a 'Make India’ programme. The part of the scheme is that they call companies interested in this which they did in last April and we submitted expression of interest and they have now shortlisted the top two. The scheme is that the top two companies or consortia will be given the chance to produce prototype systems which they would have to field and after they are fielded they would to go through a set of tests and then the chosen party will get the majority of this business. Today, there has been a short listing of the top two and that includes one, the consortia which you talked about between BEL and Rolta and a second is the consortium, which is between Tata Power SED and L&T; in this particular case led by Tatas. The share of both partners is almost equal and this is the consortium which is announced. The process of development of the prototype will then commence and 80 percent of the funding for development will be provided by the government of India where 20 percent would be provided by the concerned consortium. This is a normal process of the Make India programme where out of the interested parties the top two are selected, two parties are given 80 percent funding by the government to develop prototype systems and then finally after the due testing then the selected party gets the majority of business. Menaka: Is it like a prototype beauty pageant, if you win the beauty pageant you get the order, if you don’t, you don’t get the order? A: No it is not like that, for example there will be two systems developed and at the end of the development process which may itself take a few years and after that the one that is selected normally would get a larger portion of that business. Therefore, the total business as envisaged today is between Rs 40-50,000 crore. But it is not yet an order, this is like a selection for the development partner and there will be two selected partners. Menaka: Is the Swayamvar down to two? A: Yes. Menaka: Now you’ll compete, if you win you stand to gain from an order that sort of represents the majority of that Rs 30-40,000 crore business. It could be an order to the tune of Rs 20,000 crore or Rs 25,000 crore executable over 5-10 years. A: Yes, after the development process is over. And during the development process, 80 percent funding is provided by the government. Menaka: Only 20 percent comes out of your pocket over the period of time. Is that 20 percent material in any way that we should know about, will it show up in your financial earnings suddenly as a blip in some quarter in the next two years? A: The teams will now get together with the user agencies and then we will chalk out what exactly the details are involved in the development process and then we will get a better picture. The sums involved will be little more than Rs 500 crore for the development process itself but how much they will be, they will come out a little later. Menaka: It isn’t time yet to congratulate you in any fashion? A: First of all it is a very tough thing to get short listed among the top two. We similarly got short listed in the tactical communications system which was a first one and in that again the consortium that time was led by L&T and part of it is Tata Power. We got selected so in both these very major programmes of very great tactical communication systems and the BMS, both part have got involved and that is something which is really very difficulty to get as 14 parties were y called for the BMS and that is how the selection was done. Varinder: I wanted to know that 70-30 ratio which is being talked in the market, is it right to understand that going ahead after two years or 18 months, that will be the proportion which will be divided between two consortiums or is it too early to even discuss about that? A: It is a bit premature; the reason is very simple that these systems are very complex. It is not something which you just buy off what is available and so, the two parties will independently develop systems which meet customers or the end users requirement. The user will then get to test both of them and then pick and choose which are the features of which they would want in the final system. So, the composition of how much each consortium will share is rather premature to talk about. Menaka: Exactly what is it that this BMS entails? Can you talk about what it is that you are building as a prototype or is that classified? A: In short it is a command and control system. What happens in today’s warfare, the digitalised warfare as you call it, you need communication between the command centre and finally the soldier. So, it is a part of the whole process which is called OODA which is Observe, Orient, Decide and Act. That is the kind of loop which is normally used. This will be a unique system which will place the Indian army on a much higher pedestal because right from the command centre to the soldier who is on the field there will be a complete system which will gather information on what is happening and get back to the final decision on actual actions to be taken. It is a very complex encrypted system and therefore it will really place us amongst the top forces in the world once such a scheme is implemented. Varinder: What are the chances that after 18 or 24 months, even after developing the prototype, will it be final that these two consortiums will bag the final order or there could be a slip between the cup and the lip? A: No, that is absolutely certain. The whole foundation of ‘Make India’ programme - first of all why such a thing was required is because we are talking about systems which do not exist as readymade system hence have to be absolutely designed to suit our own requirements. It is a very secure system and is really good that apart from the traditional organisations like BEL other now organisations have also been given a chance. To even qualify or be selected we have to have a track record of having supplied various equipments over the years which have given confidence to the MoD that we can meet the requirements. Menaka: Will it be down to these two consortia to bag proportions of that order? A: Absolutely. Menaka: You keep referring to Make in India or Make India rather. That is the defence programme, right? You are not referring to the Modi government’s programme because you said you were called in April and at that point the government hadn’t even been elected. A: No, it is good you brought out this because there is often confusion. Make India is a categorisation of the procurement policy of the Government of India which has been announced sometime back. The first programme in that category was the tactical communication system which for some years back it has been done because there were some formalities because of which it has not yet got activated but it will soon get activated now we expect. The second programme is the Battlefield Management and there are several more major programmes which major programmes that are coming into this category. This is quite different from the Make in India which is a general term applicable across. So, Make India is basically a defence procurement category and this is exclusively meant for systems or equipments which do not readily exist. They have to be developed, designed and built and so there is lot of development, R&D involved. That is why it is quite exciting for us. Tata Power stock price On February 26, 2015, Tata Power Company closed at Rs 82.80, down Rs 0.2, or 0.24 percent. The 52-week high of the share was Rs 115.25 and the 52-week low was Rs 74.45. The company's trailing 12-month (TTM) EPS was at Rs 3.26 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 25.4. The latest book value of the company is Rs 52.69 per share. At current value, the price-to-book value of the company is 1.57.



http://www.business-standard.com/article/economy-policy/spending-soars-yet-india-s-military-in-crisis-115022600295_1.html

Spending soars. Yet, India's military in crisis

India is expected to spend Rs 94,587.95 crore in 2014-15 as capital expenditure, a 20% increase from Rs 78,872.23 crore last year

 The defence budget of India—the world’s largest arms importer—has more than doubled over the past decade from Rs 80,500 crore to Rs 229,000 crore for the financial year 2014-15.

Yet, the defence forces are critically short of arms, and men and women at arms.

The army, navy and air force are short of officers by 17% (7,989), 17% (1,499) and 3% (357) respectively, according to latest data tabled in the Lok Sabha. Consider the arms deficits in the three services:

Read our full coverage on Union Budget
–The Indian Air Force (IAF) is short of 272-306 fighter aircraft (as this IndiaSpend report explains) and 56 medium transport aircraft.

–The Indian Army needs about 3,000 to 3,600 artillery guns, 66,0000 assault rifles, 2 lakh pairs of ankle leather boots and 66,000 rounds of armour-piercing ammunition for T-90 tanks.

–The navy needs 12 diesel-electric submarines, 6 nuclear attack submarines and 7 stealth frigates.

The three defence wings also collectively need more than 1,000 helicopters. This is an indicative list: The actual list of defence requirements and shortages is longer.

Yet, the Ministry of Defence ­accounts for the second-highest share of India’s budget, after the finance ministry.
The defence budget accounts for 1.78% of India’s Gross Domestic Product (GDP) and 12.76% of total central government expenditure, said Amit Cowshish, distinguished fellow at Institute for Defence Studies and Analyses (IDSA).
The revenue-to-capital ratio of the defence budget is 60:40. Revenue expenditure is for payment of salaries and maintenance of defence bases and equipment. Capital expenditure is for equipment purchases and modernisation.

India is expected to spend Rs 94,587.95 crore in 2014-15 as capital expenditure, a 20% increase from Rs 78,872.23 crore last year.
“The requirement of funds (for defence purchases) is directly related to carried-forward committed liabilities and signing of new contracts,” Cowshish said in an email interview with IndiaSpend. As a result, the forces could expect a similar increase in the 2015-16 budget “if – and this now seems to be a big if – new projects, such as the one for a new combat aircraft, go through”.

Let us now look at sector-wise allocations of the defence budget.
Among the three defence wings, the army has consistently cornered the highest funding. In 2014-2015, It accounted for Rs 92,601.32 crore, which is 40% of total expenditure,  followed by the air force and navy at Rs 20,506.84 crore (9%) and Rs 13,975.79 crore (6%), respectively.
The pension question

The budget allocation does not take defence pensions into account, as this is placed under a different budget head. The MoD allocated Rs 50,000 crore for defence pensions in 2014-2015, an increase of 9% from Rs 45,500 crore in 2013-14.

Last year’s budget earmarked Rs 1,000 crore for the one-rank-one-pension scheme for ex-servicemen. This might grow to an estimated Rs 8,000 crore this year, as the Times of India reported.

More than two million ex-servicemen in India have been demanding one-rank-one-pension, which ensures that the same pension is paid to personnel who have retired in the same rank with the same length of service, irrespective of retirement date.

Funding research and development

Investing in defence research and development (R&D) is expected to boost India’s indigenous arms industry and reduce its dependence on imports. The Indian government spent 42.7% of defence capital expenditure on arms imports in 2013-2014, according to data tabled in the Lok Sabha.

As we mentioned before, India is the world’s largest importer of arms as per Stockholm International Peace Research Institute (SIPRI), an independent international institute that researches conflicts, armaments, arms control and disarmament.

The MoD has almost doubled the capital expenditure for R&D to Rs 9,298.25 crore in 2014-2015 from Rs 5,257.60 crore in 2013-2014. Besides, the MoD has provided Rs 5,984.67 crore for salaries and maintenance of research centres.
Among the three defence wings, the army has consistently cornered the highest funding. In 2014-2015, It accounted for Rs 92,601.32 crore, which is 40% of total expenditure,  followed by the air force and navy at Rs 20,506.84 crore (9%) and Rs 13,975.79 crore (6%), respectively.
The pension question

The budget allocation does not take defence pensions into account, as this is placed under a different budget head. The MoD allocated Rs 50,000 crore for defence pensions in 2014-2015, an increase of 9% from Rs 45,500 crore in 2013-14.

Last year’s budget earmarked Rs 1,000 crore for the one-rank-one-pension scheme for ex-servicemen. This might grow to an estimated Rs 8,000 crore this year, as the Times of India reported.

More than two million ex-servicemen in India have been demanding one-rank-one-pension, which ensures that the same pension is paid to personnel who have retired in the same rank with the same length of service, irrespective of retirement date.

Funding research and development

Investing in defence research and development (R&D) is expected to boost India’s indigenous arms industry and reduce its dependence on imports. The Indian government spent 42.7% of defence capital expenditure on arms imports in 2013-2014, according to data tabled in the Lok Sabha.

As we mentioned before, India is the world’s largest importer of arms as per Stockholm International Peace Research Institute (SIPRI), an independent international institute that researches conflicts, armaments, arms control and disarmament.

The MoD has almost doubled the capital expenditure for R&D to Rs 9,298.25 crore in 2014-2015 from Rs 5,257.60 crore in 2013-2014. Besides, the MoD has provided Rs 5,984.67 crore for salaries and maintenance of research centres.

 

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