India becomes fourth largest spender on defence

US research firm IHS Inc report says India has become the world’s fourth largest spender on defence, following a 13.1% increase in its 2016-17 defence budget.

India will finalize defence orders worth2.8 trillion by 2016 even as the defence ministry is pushing for at least 40% indigenous content in the defence products, also India becomes the US’s largest defense market.

• The Leading Defence Spenders with their Rankings:

1. United States of America,
2. China,
3. United Kingdom.

 India’s Spending’s in Defence Sector:

• India’s rise in the rankings from sixth position last year is a result of an increase in expenditure to $50.7 billion.
• IHS analysis emphasizes short-term pressures, caused by increases to military pay and the introduction of one rank, one pension (OROP) are the main reasons for the higher rate of growth in budget allocation to defence.
• The IHS Report forecasts India’s defence budget and procurement spending to hit $64.8 billion and $15 billion, respectively, by 2020 as the country moves to update its armoured vehicles and increase its fleet of combat aircraft.

Impact of OROP:

• The 7th Pay Commission has recommended a 23.55 % increase in salary, allowances and pension, involving an additional amount of Rs 1.02 lakh crore.
• The total increase in the Defence Budget for pensions is estimated to go up from Rs 54,000 crore to around Rs 65,000 crore (proposed BE 2016-17), thereby increasing the Defence Pension Outlay by about 20 per cent.