World military expenditure for the first breached the milestone of $2 trillion in 2021, the Stockholm International Peace Research Institute (SIPRI) stated, while adding that the top three largest defence spenders were the United States, China, and India.
The Stockholm-based report stated, “Total global military expenditure increased by 0.7 percent in real terms in 2021, to reach $2,113 billion. The five largest spenders in 2021 were the United States, China, India, the United Kingdom, and Russia, together accounting for 62 percent of expenditure.”
India’s military spending of $76.6 billion ranked third highest in the world. This was up by 0.9 percent from 2020 and by 33 percent from 2012, the Stockholm-based institute stated.
In a push to strengthen the indigenous defence ecosystem, 64 percent of capital outlays in India’s military budget for 2021 were earmarked for acquisitions of domestically produced arms.
US, China, and India are top military spenders
At the top spot, the United States spent $801 billion in 2021, a drop of 1.4 percent from 2020, the statement said.
In the period from 2012 to 2021, the US increased funding for military research and development by 24 percent and reduced spending on arms purchases by 6.4 percent, according to the statement.
Second place went to China, which spent $293 billion on defence, an increase of 4.7 percent compared with 2020. India’s military spending ranked third with $76.6 billion last year, an increase of 0.9 percent in comparison with 2020.
‘Make-in-India’ push by Indian Defence Ministry
Giving a major fillip to the domestic defence manufacturing ecosystem, the Indian Ministry of Defence exceeded its target of spending 64 percent of modernisation funds on buying from domestic firms in the last financial year 2021-22.
Notably, the Defence Ministry had earmarked 64 percent of the ‘Capital Acquisition Budget’ for the domestic industry in FY 21-22. Achieving this milestone, the defence ministry spent 65.50 percent of the budget to procure arsenals from Indian defence firms.
“At the end of FY 2021-22, the MoD has been able to overachieve this target and has utilised 65.50 percent of the Capital Acquisition Budget on indigenous procurements through Indian Industry to achieve Prime Minister Narendra Modi’s vision of ‘Aatmanirbhar Bharat’,” the Defence Ministry mentioned in an official statement.
In a bid to push Make-in-India in defence, the ministry of defence has been sourcing equipment for defence requirements from the Indian defence firms and not relying on foreign vendors only.
It is important to note that, India spends more than Rs 2 lakh crore on different acquisitions for its defence requirements, and earlier, the majority of armed requirements were used to fulfill through imports but the situation has changed in the last few years.
Further, as per the preliminary expenditure report of March 2022, the defence ministry has been able to utilise 99.50 percent of the Defence Services Budget in FY 2021-22.
The FDI push
In May 2020, the government of India increased the Foreign Direct Investment (FDI) limit from 49 percent to 74 percent under the automatic route in the defence sector.
Interestingly, India is one of the largest importers of arms globally. According to estimates, the Indian defence forces are projected to spend around USD 130 billion (in capital procurement in the next five years. Aligned with the same ethos, the government now wants to reduce dependence on imported military platforms and has decided to support domestic defence manufacturing.
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