India’s defence budget, strategic orientation and military modernisation

Although the Modi Government is seeking to enhance its strategic position with the defence budget’s focus on military modernisation, this paper argues that it effectively preserves the status quo by continuing to focus its strategic orientation on Pakistan. Summary The Modi Government is trying to advance its strategic position by enhancing its diplomatic reach, but internally, the defence allocation has focussed on Foreign Direct Investment, modernising the armed services and fine-tuning their priorities. In the early 2000s, the government saw the need to have a strategic blueprint for defence spending and planning. To achieve this, it announced such policy initiatives as a Defence Procurement Procedure in 2002, a Defence Offsets Policy in 2006, a Long-Term Integrated Perspective Plan (LTIPP) in 2009 and a Defence Production Policy in 2011. Eight committees/task forces were set up to look into various aspects of national defence, but no White Paper was ever produced. It is a situation that continues to this day. Key points The July 2014 Union Budget sets the military’s allocation at US$38.35 billion and raises the foreign investment limit in the domestic defence industry from 26 per cent to 49 per cent, to boost modernisation. The defence budget accounts for 1.78% of GDP and 12.76% of total central government expenditure. Although the Modi Government is seeking to enhance its strategic position with the defence budget’s focus on military modernisation, it effectively preserves the status quo by continuing to focus its strategic orientation on Pakistan. Without some attempt to sketch a Defence White Paper, the defence budget is not able to explicitly reflect India’s strategic orientation and priorities