Govt’s announcement of $130 Bn defence renewal project attract manufacturers interest

Defense Minister Rajnath Singh outlined a spending program over an eight-year time frame to modernise India’s armed forces at the Aero India show held in the southern Indian city of Bangalore. It follows the government’s decision to increase to its capital expenditure, the component that funds purchases of weapons, in its defense budget for fiscal 2021, starting in April, by more than 19% to 1.35 trillion rupees ($18.6 billion) from 1.13 trillion rupees the previous year. The increase in amount is the largest in 15 years according to a Defense Ministry statement. This fund is non-lapsable for the first time ever, allowing it to roll over next year if the negotiation for weapon purchases drags.

Among new contracts up for grabs is for the Indian Air Force to acquire 114 medium fighters. Boeing, Lockheed Martin, SAAB and MiG are among the contenders for the estimated $25 billion contract.

Reflecting the renewed interest in India as one of the world’s top weapons markets, a total of 201 memorandums of understanding were inked for product launches and technology transfers during this year’s Aero India, up from 50 two years ago. Among one of the prominent MOUs, Israeli company Rafael Advanced Defense Systems will partner with Indian company Bharat Dynamics to jointly provide an anti-torpedo defense system called SHADE for the Indian Navy. Partnership like this is result of India’s effort to create a capacity for the development of a domestic defense industry ecosystem.

Joint ventures in India have garnered huge Industry revenues. As the Make in India campaign moves forward government took one step further when they announced India’s aim for $5 billion in arms exports last year.