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Defence Forces: The Yawning Gap Between Allocations & Spend

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A letter reportedly written by Army General V K Singh triggered a raging controversy after it claimed that, among other failings in defence capabilities, India’s existing air defence systems cannot effectively protect against enemy air attacks as “they were 97% obsolete”.


How much has India really spent on overall defence modernisation? That depends on when you start the clock. It also depends on what you call modernisation. IndiaSpend’s Sourjya Bhowmick finds that despite being the largest importer of arms and equipments in the world, there are yawning allocation to spending gaps.


Before we look at the Defence Forces’ own Annual Report for 2010-11, let’s look at a CII-Deloitte Consulting report titled ‘Prospects For Global Defence Export Industry In Indian Defence Market’.


The report says that under spending over the period 2003-2010 has been $6.75 billion. In this period the Army has `under spent’ 31% of its allocations, Navy under spent 21% and Air Force under spent 47%.


The same report says that in the current plan period (2007-2012), $100 billion is likely to be spent on defence procurement. However, the Government’s own estimate based on Union Budgets (2007-08 to 2012-13) is approximately $75 billion.


The CII report says the next plan period (2012-2017) is set to see a $120 billion on defence modernisation. While in the last 3 years, the capital expenditure on Army, Navy and Air Force has been $43 billion dollars. We reported these figures in an earlier report.


Some major acquisitions which readers would recall from frequent media reports include 180 Sukhoi Aircrafts, Scorpene Submarines, T-90 Russian Battle tanks as well as upgrading information and communication systems.


Let us now take a look at the capital expenditure for the past few year as well as projected expenditure for the next few years based on the CII- Deloitte analysis which in turn relies on data from the Thirteenth Finance Commission.



  2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 Total 2010-2015
Capital Expenditure 13 14 16 17 19 80
Army 7 8 8 9 10 42
Navy 2 2 2.5 3 3 13
Air force 4 4 5 5 6 25

*US $ Billion

Source: CII-Deloitte Report


Now let us look at the Ministry of Defence’s Annual Report for 2011-12 and see the capital acquisitions that were made and those which are in the process for the last few years.




As per the Annual Report for 2012, here are the modernisation initiatives and ammunition procurement of the Indian Army.


  • Digital Control Harness and Fire Control systems for T-72 Russian tanks (now a bit outdated) in progress.
  • Induction T-90 tanks and Arjun Tanks proceeding as per plans.
  • Repair facilities for T-90 tanks, procurement of AMK 339 and 3UBK 20 Invar missiles are in advanced stage of procurement.
  • Anti Tank guided missiles are also under process.
  • Contracts for Akash Missile system concluded.
  • Indigenous TK T 90 gun barrels are successfully evaluated and clearance issued.
  • 84 mm rocket launcher procurement deal signed with Sweden in March 2011 and to be delivered by December, 2011.
  • Ammunition for T 90 tanks likely to deliver by March 2012.


It is evident from all these points that all the modernisation initiatives and ammunition deals are in ’advanced stages’, ‘deal signed’, ‘to be delivered’ and ‘in progress’.




The Annual Report does not speak of any modernisation aspects in the Navy section. The CII-Deloitte report says:


  • As of 2010, 36 ships and 6 Scorpene submarines were under order.
  • 2 aircraft carriers were in stages of construction along with 8 Boeing P8-1 Maritime-Multi Mission aircrafts.
  • Further plans to acquire 6 diesel submarines and indigenously construct 3-5 nuclear powered Arihant submarines.




The Air Force section in the Annual Report for 2010-11 has more details.


There is an induction of C 130 J Hercules Aircraft capable of operating in all weather conditions.

  • There has been inclusion of Mi-17 V5 helicopters, equipped for night operations which can be used for air maintenance to supporting Army operations. New helicopter units are being raised since September, 2011 after this.
  • Mirage 2000 aircraft up gradation is undergoing currently as per a contract between Hindustan Aeronautics Limited (HAL) and French Manufacturers M/s Thales and M/s Dassault Aviation signed on July, 2011. Two aircrafts are in France right now and two more are in HAL which the French companies are upgrading.
  • MIG 29 upgradation is currently being done with the Russians. 3 are undergoing flight trial in Russia and 3 more are at their final stages of upgrade.
  • AN 32 aircraft, used for the last 25 years, is reequipped with new generation equipment so that it can be used for upto 40 years.
  • ‘Portable all weather maintenance shelters’ procured for SU 30 MKI squadrons. 27 shelters already procured for 2 squadrons and 50 more are in their last stage of procurement.


Interestingly, as we mentioned earlier that the capital expenditure for all three services consistently increased over the years though the under spending over the period 2003-2010 has been $6.75 billion.


The Next Decade


According to the CII-Deloitte Report, as per the Field Artillery Rationalisation Plan (FARP), the army is expected to purchase 2,700 to 3,600 guns requiring an expenditure of $4.7 billion to $6.4 billion in the next 15 to 20 years. A few other acquisitions of other services will include:


145 Air Mobile Ultra Light Howitzers costing $647 million.


180 Sukhoi SU-30 MKI aircrafts valued at $9.9 billion


120 indigenously manufactured Tejas fighters for which Government has decided an additional funding $1.71 billion.


Medium Multi-Role Combat Aircraft MMRCA) acquisition valued at $9 billion, mainly to replace MIG 21s for which field trials are underway between 6 international companies.

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