Dissecting India’s Defence Budget 2024-2025

#1 · 2nd September 2024, 10:27 am

Quote from strafasia on 2nd September 2024, 10:27 am
Over the past few years, India’s defence budget has shown a consistent upward trajectory, which highlights the Indian government’s commitment towards modernising its defence infrastructure. To provide a glimpse into this increase, in 2020, the total defence budget was approximately ₹4,71,378 crore (equivalent to ₹5.6 trillion or US$67 billion in 2023). In the ongoing fiscal year 2024-2025, this amount has risen to ₹6.21 lakh crore, marking a 31% increase from 2020. As this increase in defence budget unfolds, one key question arises: to what extent does this recent increase in spending reflect the Indian government's broader objectives, particularly in relation to the 'Make in India' and ‘Atmanirbhar Bharat’ programmes, which aim to increase indigenous manufacturing and technological advancements?

The increase in defence spending is primarily motivated by the overarching goal of modernising the Indian Armed Forces and, more importantly, becoming more self-reliant in defence manufacturing. This focus is clearly reflected from the pattern of defence spending as envisaged in the budget.

A notable portion of the defence budget is directed towards schemes designed to bolster indigenous technological advancements. Taking the example of the Acing Development of Innovative Technologies with iDEX (ADITI) scheme, introduced in March 2024, a total of ₹400 crores has been allocated to the scheme from the defence budget. It aims to provide grants of up to ₹25 crore to start-ups for developing homegrown advanced defence technologies in areas like satellite communication, cyber technology, autonomous weapons, and artificial intelligence.

The significance of the ADITI scheme is evident from the fact that the entire defence budget was adjusted to accommodate its funding. For instance, the total defence budget that is ₹621,940.85 crore, is actually an increase of around ₹400 crores over the amount initially proposed in the interim budget on 1 February 2024.

Beyond dedicating funds to encourage government and private sector partnerships through such schemes, the government is also enhancing efforts to ramp up research and development for indigenous technological advancements through various public organisations. Notably, the Defence Research and Development Organisation (DRDO), working under the Ministry of Defence (MoD) has been allocated a whopping ₹23,855 crores. DRDO plays a crucial role in developing defence technologies covering various fields like aeronautics, electronics, and missiles. It is India's largest research organisation and supports the Indian strategic goals of self-reliance and modernisation.

The focus on indigenisation is further evident from the budget allocated for defence procurements. For the fiscal year 2024-25, ₹105,518.43 crores, or 75% of the total procurement budget, has been allocated for buying defence equipment from domestic industries. The allocation marks a departure from previous years when a larger portion was devoted to foreign sources.

While the 75% allocation for domestic defense procurement budget may appear to signal a robust push towards indigenisation, many observers caution that the ambitious target seems impossible to achieve, especially considering the current state of India’s much-hyped indigenisation programs. Take, for instance, the Akash Missile Program, which was initiated in the 1990s. Despite decades of development, the program has been plagued by significant technical issues. For instance, during fire tests, an alarming 43% of the missiles failed to fire.

Similarly, the Tejas fighter aircraft programme, another flagship project, has also faced severe setbacks. Despite efforts dating back to the 1980s, India has struggled to develop domestically a functional engine for the Tejas. This ultimately led them to import engines from US Company General Electric (GE). Moreover, according to India’s own Comptroller and Auditor General (CAG), there are 57 shortcomings in the Tejas Mark-1, and it is unfit for service.

However, in all this, the question that arises is that why is India so determined to ramp up its defence capabilities and boost its indigenous production. The answer lies in its growing aspirations to become a hegemonic power. As a revisionist power as its economic strength increases, it naturally seeks to expand its influence, aligning with one of the cardinal principles of International Relations which suggests that major powers act ambitiously because they have the resources to do so.
This ambitious drive might have significant implications for Pakistan in the future, especially if India manages to materialise what it is currently projecting. Consequently, it may alter the precarious strategic balance by prompting a new wave of arms race.
The good news however, is that the current pace of the Indian drive for indigenisation provides Pakistan with ample time to consider challenges and develop adequate countermeasures. Pakistan can adopt a dual-pronged strategy in this regard. In the short term, Pakistan must maintain adequate conventional capabilities, supported by a credible nuclear deterrent, to address the growing conventional asymmetries with India. In the long term, Pakistan must focus on economic recovery, which is essential for strengthening its own indigenisation programmes already being spearheaded by the Pakistan Air Force.

Over the past few years, India’s defence budget has shown a consistent upward trajectory, which highlights the Indian government’s commitment towards modernising its defence infrastructure. To provide a glimpse into this increase, in 2020, the total defence budget was approximately ₹4,71,378 crore (equivalent to ₹5.6 trillion or US$67 billion in 2023). In the ongoing fiscal year 2024-2025, this amount has risen to ₹6.21 lakh crore, marking a 31% increase from 2020. As this increase in defence budget unfolds, one key question arises: to what extent does this recent increase in spending reflect the Indian government's broader objectives, particularly in relation to the 'Make in India' and ‘Atmanirbhar Bharat’ programmes, which aim to increase indigenous manufacturing and technological advancements?

The increase in defence spending is primarily motivated by the overarching goal of modernising the Indian Armed Forces and, more importantly, becoming more self-reliant in defence manufacturing. This focus is clearly reflected from the pattern of defence spending as envisaged in the budget.

A notable portion of the defence budget is directed towards schemes designed to bolster indigenous technological advancements. Taking the example of the Acing Development of Innovative Technologies with iDEX (ADITI) scheme, introduced in March 2024, a total of ₹400 crores has been allocated to the scheme from the defence budget. It aims to provide grants of up to ₹25 crore to start-ups for developing homegrown advanced defence technologies in areas like satellite communication, cyber technology, autonomous weapons, and artificial intelligence.

The significance of the ADITI scheme is evident from the fact that the entire defence budget was adjusted to accommodate its funding. For instance, the total defence budget that is ₹621,940.85 crore, is actually an increase of around ₹400 crores over the amount initially proposed in the interim budget on 1 February 2024.

Beyond dedicating funds to encourage government and private sector partnerships through such schemes, the government is also enhancing efforts to ramp up research and development for indigenous technological advancements through various public organisations. Notably, the Defence Research and Development Organisation (DRDO), working under the Ministry of Defence (MoD) has been allocated a whopping ₹23,855 crores. DRDO plays a crucial role in developing defence technologies covering various fields like aeronautics, electronics, and missiles. It is India's largest research organisation and supports the Indian strategic goals of self-reliance and modernisation.

The focus on indigenisation is further evident from the budget allocated for defence procurements. For the fiscal year 2024-25, ₹105,518.43 crores, or 75% of the total procurement budget, has been allocated for buying defence equipment from domestic industries. The allocation marks a departure from previous years when a larger portion was devoted to foreign sources.

While the 75% allocation for domestic defense procurement budget may appear to signal a robust push towards indigenisation, many observers caution that the ambitious target seems impossible to achieve, especially considering the current state of India’s much-hyped indigenisation programs. Take, for instance, the Akash Missile Program, which was initiated in the 1990s. Despite decades of development, the program has been plagued by significant technical issues. For instance, during fire tests, an alarming 43% of the missiles failed to fire.

Similarly, the Tejas fighter aircraft programme, another flagship project, has also faced severe setbacks. Despite efforts dating back to the 1980s, India has struggled to develop domestically a functional engine for the Tejas. This ultimately led them to import engines from US Company General Electric (GE). Moreover, according to India’s own Comptroller and Auditor General (CAG), there are 57 shortcomings in the Tejas Mark-1, and it is unfit for service.

However, in all this, the question that arises is that why is India so determined to ramp up its defence capabilities and boost its indigenous production. The answer lies in its growing aspirations to become a hegemonic power. As a revisionist power as its economic strength increases, it naturally seeks to expand its influence, aligning with one of the cardinal principles of International Relations which suggests that major powers act ambitiously because they have the resources to do so.

This ambitious drive might have significant implications for Pakistan in the future, especially if India manages to materialise what it is currently projecting. Consequently, it may alter the precarious strategic balance by prompting a new wave of arms race.

The good news however, is that the current pace of the Indian drive for indigenisation provides Pakistan with ample time to consider challenges and develop adequate countermeasures. Pakistan can adopt a dual-pronged strategy in this regard. In the short term, Pakistan must maintain adequate conventional capabilities, supported by a credible nuclear deterrent, to address the growing conventional asymmetries with India. In the long term, Pakistan must focus on economic recovery, which is essential for strengthening its own indigenisation programmes already being spearheaded by the Pakistan Air Force.