IHS projects that New Delhi will spend $65.4 billion despite cuts announced by the government

Information Handling Services (IHS), the leading source of information, insight and analytics, has predicted that India would become the fourth biggest defence spender by 2020, behind the U.S., China and Russia, surpassing France, Japan and the U.K. IHS Jane’s Defence Budgets projects that India’s defence spend will reach $65.4 billion in 2020 despite cuts announced by the government last month, caused by the challenging economic and fiscal climate. This obstacle is expected to wane over the next three years, with IHS expecting India’s GDP growth to recover to rates of around 8 per cent by 2015 – allowing India’s plans for increasing defence spend to recover from 2015 to 2020.

Based on current projections, IHS Jane’s Defence Budgets expects the Indian defence budget, including related pensions obligations, to reach $55.6 billion over the five years.

Craig Caffrey, Senior Asia-Pacific Analyst, IHS Jane’s Defence Budgets, said: “The economic growth that fuelled increasing defence spend in recent years faltered in 2012 and that’s what forced the government to re-visit its spending assumptions. Defence spend as a percentage of the GDP is actually projected to continue to fall through to 2020, but that will still allow for significant real growth in dollar terms. We anticipate that India’s defence spend will overtake France’s in 2016, [that of] the U.K. in 2018, and Japan’s in 2020. By the end of the decade, India is expected to be spending up to $17.4 billion specifically on the procurement of defence equipment each year.’’

‘Major market’

In his comments, James Hardy, Asia-Pacific Editor, IHS Jane’s Defence Weekly, said: “India continues to be a major market for the international defence industry, with major investments in all three services and its strategic missile forces. While short-term budget cuts will have an effect on these procurements, India’s geostrategic position and the parlous state of much of its inventory means that it will continue to invest in new fighter aircraft, attack helicopters, howitzers, submarines and aircraft carriers, to name but a few of its many programmes.”

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