India’s defence spending must rise to 2.5–3 percent of GDP from the current 2 percent level, Defence Secretary Rajesh Kumar Singh said at Network18’s Reforms Reloaded summit on September 22.
“We can do a 10–15 percent increase in capex every year. A 10 percent increase is adequate to meet requirements. In the medium term, with the Finance Commission, we can ask for 17–18 percent increase over the next five years,” Singh said.
Singh emphasised that India plans to spend $25–30 billion annually over the next decade, with a heavy tilt toward indigenisation. “Our current plans are that at least 75 percent of capex would be spent within the country. We did 88 percent last year and hope to keep over 75 percent levels. In areas where technology readiness is high, we will do entirely indigenous procurement,” he added.
Focus on advanced platforms and munitions gaps
Singh said priority investments would include standout platforms and emerging technologies such as drones, UAVs, underwater drones, satellite imagery, and precision munitions. An RFP worth Rs 30,000 crore for Medium Altitude Long Endurance (MALE) drones is expected soon.
“Bharat Dynamics Ltd and Munitions India Ltd have been unable to fully meet requirements. Private sector has been unable to invest in munitions and missiles, so we are trying to move away from order reservations,” Singh noted, stressing the need for a broader industrial base.
Opening procurement, boosting start-ups
The government is also working to make procurement more open and start-up friendly. “The idea is to go from nomination-based contracts to open bidding and price discovery. We are trying to create a section for start-ups, and we will give assurances for five years in procurement. By end of December, we will make the capex document much more simple and friendly. The intent is to have DAP ready by the first day of next year,” Singh said.
India has already signed or is close to signing contracts worth Rs 1.5 lakh crore, with another Rs 75,000 crore in the pipeline. Singh noted that spending will remain either equal or higher than last year’s Rs 2.09 lakh crore.
Balancing US and Russia
Singh said India would continue to strike a balance in defence partnerships. “Whichever country is ready to share critical technology we can go with those countries. We will go by our service requirements. We will have enough opportunities for both the US and Russia to participate,” he added.
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