NEW DELHI — India’s defense budget for 2020-2021 will be $73.65 billion, the country government announced Saturday, but officials and analysts are warning the amount is unlikely to meet new demands for weapons purchases and military modernization, as India is set to spend about 90 percent if its defense funds on existing obligations.
“The capital budget leaves no room for any big-ticket weapons purchase, as over 90 percent of the allocation capital funds will [be spent] for past [defense] contracts’ committed liabilities,” a senior Ministry of Defence official told Defense News.The limited procurement spending is expected to directly impact “Make in India” defense projects, a policy meant to boost the local economy under the ruling National Democratic Alliance government.
“This also [leaves] no room for any major weapons purchases from U.S. at least for one to two years,” the MoD official added.
India is slated to make a number of purchases through the U.S. Foreign Miltiary Sales program, including 22 MQ-9 Reaper (Predator B) drones for $2.6 billion; and additional six P-8I maritime surveillance aircraft for $1 billion; two Gulfstream 550 aircraft for intelligence, surveillance, target acquisition and reconnaissance for nearly $1 billion; and one unit of the National Advanced Surface-to-Air Missile System II for more than $1 billion.
During at least the last two years, the Indian military has complained about a lack of funds for resolving existing liabilities. Amit Cowshish, a former financial adviser for acquisitions at the MoD, said the military will likely continue to face the challenge of preventing defaults on contractual payments.