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By 2028, Indian Defence Budget to Go down by 50% : MoS Defence

Discussion in 'Indian Defence Industry' started by Ripcord322, Jan 5, 2017.

  1. Ripcord322

    Ripcord322 Lieutenant FULL MEMBER

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    http://idrw.org/india-eyes-cut-defe...decade-minister-state-defence-subhash-bhamre/


    According to the (Minister Of State) of defense... The Government wants to cut the defense budget by 50% by 2028.....


    A few Excerpts from the Article...




    Published January 5, 2017
    SOURCE: PTI



    Nearly $14 billion worth of defence offset obligations would be discharged in India by foreign original equipment manufacturers (OEMs) by 2028, MoS for Defence Subhash R Bhamre said today, and indicated that the government proposes to reduce the defence budget by 50 per cent within a decade. He said the defence industry has the potential to become a huge foreign exchange earner and also lead the country to its professed goal of self-reliance. “Nearly $14 billion worth of defence offset obligations will be discharged by the foreign OEMs by 2028,” he said while delivering the inaugural address at seminar – Leveraging defence expenditure as a tool for nation building – organised by College of Defence Management here. He noted that India has the 3rd largest armed forces in the world and spends approximately 40 per cent of its total defence budget on capital acquisitions, and about 60 per cent of defence requirements are met through imports. “The present government has emphasised on indigenous manufacturing to reduce the defence budget by 50 per cent within a decade,” the Union minister said. “There is an urgent need for innovation in the defence manufacturing sector with increased focus on R&D and to prepare a pool of human resource expertise which will help in making equipment and technologies cheaper,” he said. Thanks to the Centre’s ‘Make in India’ campaign, the defence sector has moved from the periphery to the core of Indian manufacturing, he pointed out. “The sector not only has the potential to augment manufacturing but also add nearly one million direct and indirect jobs,” Bhamre said. He also said the government is taking steps to bring in a framework that encourages collaboration between public and private sector companies for defence export based on public private partnership model. “The DPSUs (Defence Public Sector Undertakings) and private sector should also put in place a system to share the capability and capacity to support overseas sales, servicing and maintenance throughout the life of the product,” he said. Pointing out that the human resource capacity in the private sector has already demonstrated its worth in fields of automobile, IT and service sectors at global platform, he said the government is trying to replicate the same model by inducing private sector and foreign OEMs to invest in defence manufacturing.




    Members..... Can you please.. Clarify / Authenticate this report...
     
    Last edited: Jan 5, 2017
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  2. Ripcord322

    Ripcord322 Lieutenant FULL MEMBER

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  3. A_poster

    A_poster Captain FULL MEMBER

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    I think he meant budget related to purchase of foreign equipment. At least the text gives this idea.
     
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  4. Ripcord322

    Ripcord322 Lieutenant FULL MEMBER

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    What exactly does this mean.... This seems official.... I mean... The MoS said it ....
     
  5. A_poster

    A_poster Captain FULL MEMBER

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    Read the text again. This whole essay/report is about foreign imports. Either he is misquoted, or more probably, he overlooked/skipped some phrases, thus changing the meaning of this report.
     
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  6. Ripcord322

    Ripcord322 Lieutenant FULL MEMBER

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    Oh....that's what I thought... It didn't make sense earlier... Cool...

    Btw: I was surprised when he said we import 60% of our defense needs...
    Let's hope the situation improves...
     
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  7. Ripcord322

    Ripcord322 Lieutenant FULL MEMBER

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    His quote was...

    “The present government has emphasised on indigenous manufacturing to reduce the defence budget by 50 per cent within a decade,”


    I don't know why he said "defence budget".... I guess he meant "Expenditure on Imports"....
     
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  8. randomradio

    randomradio Colonel REGISTERED

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    It's true. The govt estimates that the cost of capital acquisitions will be highly reduced because of indigenization. And the plan is also to reduce the revenue expenditure.

    What this means is, the defence budget will grow much slower, but the volume of purchases will continue to remain high. It will grow much slower due to reduced costs.
     
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  9. Ripcord322

    Ripcord322 Lieutenant FULL MEMBER

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    Does That mean the Indian Defense Budget of 2028.... Might be... 20~25 Billion Dollars...!?

    That will be some... 0.75 % of the GDP.... That is... Well... 'small'...
     
  10. Levina

    Levina Guest

    I don't think this is happening any time soon.
    There's a difference between "wants to cut" and "will cut". The latter being a definite possibility.

    This is what the article says >>>
     
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  11. randomradio

    randomradio Colonel REGISTERED

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    No. It means the cost of the planned purchases will drastically reduce, so you can see it as defence budget growth up to 2028 minus 50%.

    So instead of a 10% growth in the budget every year, we can manage with 5% because of lower cost of procurement and maintenance.
     
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  12. Ripcord322

    Ripcord322 Lieutenant FULL MEMBER

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    Well... If the MoS is having thoughts of Budget Cuts...Then I guess... This Administration wants to save all that money and put it elsewhere...

    I hope we save money by cutting our imports and starting local production..

    This Administration seems to have a bigger game in mind... They are definitely thinking of 15-20 years down the line...
     
  13. vstol jockey

    vstol jockey Colonel MILITARY STRATEGIST

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    What will be the size of our economy in 2028 and with just 50% of present percentage of GDP, what will be the overall size of the budget in terms of USD? Just think about it.
     
  14. Ripcord322

    Ripcord322 Lieutenant FULL MEMBER

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    Hi Sir...

    If we assume that our economy is at 2.40 Trillion USD at the end of 2016...

    Then...if we assume a steady 8% YoY Growth in Real terms...

    Then our GDP by 2028 should be...

    Around... 5.595 Trillion US Dollars...
    (+- 0.25 Trillion USD)


    (I arrived at this figure using a step calculation function and looping it until 2028)

    Now if our Defence Budget by then is say...

    25 Billion USD....( Then 0.44 % of GDP)

    if it is

    30 Billion USD....(Then 0.53 % of GDP)

    If it is

    40 Billion USD... (Then 0.71 % of GDP)


    If it is

    50 Billion USD.... (Then 0.89 % of GDP)

    ...


    And of course 1% of GDP Means... 59.5 Billion....



    ( btw...If we manage a steady 10% till 2028...then our economy will be at 7.532 Trillion... But that looks unlikely...
    A steady 8% is what looks achievable... Hence that is my assumption for the growth rate... )
     
    Last edited: Jan 5, 2017
  15. GSLV Mk III

    GSLV Mk III Captain FULL MEMBER

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    I'm not an economic expert here, but it does seem that the budget expenditure as percentage of GDP is also increasing. It was 28% of GDP during 2014-15 (combined central & state budget) . Given improvement of tax to GDP ratios post GST implementation.

    @Nilgiri your views ?
     
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