India Defence and Security Report 2017
BMI View: India is one of the biggest defence spenders globally. The country has one of the world's largestarmed forces - much of which requires modernisation - and faces a range of external and internal securitythreats that drive investment into military personnel and equipment including terrorism, insurgencies,tensions with neighbouring Pakistan and China's growing assertion in the region. India remains reliant onimports to meet much of its armed forces' requirements for technologically advanced equipment; however,amid efforts to develop and expand the local defence industry under Prime Minister Modi's 'Make in India'initiative, we expect the country's huge defence trade deficit to gradually narrow over the coming decade.
India's FY2017-18 budget proposal, announced in February 2017, amounts to INR2.76trn (USD42.6bn),a moderate 6% y-o-y increase in local currency terms. Of the total, 57% of spending (excluding pensions)has been allocated to the army, while the air force will receive 22%, the navy 14%, and the DefenceResearch and Development Organisation (DRDO) 6%. Around 30% of the budget is being spent oncapital acquisitions.
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