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India may spend $80 bn in 5 yrs on defence: CII

business Updated: Jun 17, 2010 22:29 IST
CII-Deloitte report

India is estimated to spend about $ 80 billion in the next five years on defence acquisitions, making it one of the most attractive markets for global defence firms, an industry study has said.

The CII-Deloitte report on 'Prospects for Global Defence Industry in Indian Defence Market' said the defence capital expenditure budget was expected to achieve a Compound Annual Growth Rate (CAGR) of 10 per cent from 2011 to 2015.

Total indigenous production between 2011 and 2015 would need to expand from about $ 30 billion to more than $ 70 billion in the span of five years to be able to achieve 70 per cent indigenisation by 2015, the report, released during the Eurosatory-2010 defence exhibition in Paris, said.

It noted that the defence industry would need to expand by an average of 30 per cent a year over the next 5 years.

The report, released by Defence Production Secretary RK Singh, provides information to global investor firms to understand the Indian defence requirements and domestic industry capabilities and opportunities in four key domains - maritime, land, aerospace and electronics.

Singh, in his address, said the 'Buy and Make (Indian)' category in the Defence Procurement Policy of 2009 was an opportunity for foreign players to partner with the Indian Defence industry.

He further said the new category would enhance the formation of joint ventures and technology partnership between the Indian and foreign defence industry.

Responding to a query, Singh clarified that the defence Ministry was in favour of continuing with the Foreign Direct Investment (FDI) limit of 26 per cent.

"Over the past decade, the Indian Ministry of Defence has put into motion plans for an unprecedented modernisation programme of its defence capabilities.

"In this context, India has embarked on a major defence acquisition programme, aimed at increasing the size, capability and self-reliance of its armed forces," it said.

The report said the aerospace and defence sector was growing at an unprecedented rate and emerging as a key participant in the Asia Pacific region. It also provided an indicative list of the Indian defence acquisition plans.

In the 2010-11 budget, the government had earmarked $ 32.03 billion (Rs 1,47,344 crore) for defence.

"More than $ 42 billion in total defence expenditure is targeted by 2015, of which approximately $ 19.20 billion would be expected to be spent on capital equipment for the armed forces," the report said.