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India Plays Catch-up with China: Asia’s titans boost 2011 defense budgets

Posted on: March 21, 2011

China announced on 5 March 2011 that it would boost defense spending by 12.7% in 2011 to US$91.5 billion, up strongly from the 7.5% increase seen in 2010. India, China’s other Asian peer aside from Japan, recently boosted its defense budget by 11.6% for 2011 to US$36.5 billion, after a rise of only 4% in 2010 (Nezavisimaya Gazeta). India’s defense procurement spending is slated to rise by 14% in 2011, to US$15.4 billion, with the Indian Navy’s budget set to rise by nearly 17%, the Army budget by 23%, and the Air Force budget by 24%, according to Defense News.

We find the spending increases noteworthy because while China is preparing for a range of contingencies and sees the U.S. as its key strategic competitor, India is taking a Pakistan- and (increasingly) China-centric approach to its defense planning and acquisitions. A recent example of a more China-facing Indian strategic choice is the Indian Air Force’s decision to deploy two squadrons of SU-30 fighters—India’s most capable—to Chabua and Tezpur airbases in Assam, which lies near the strategic border state of Arunachal Pradesh (Hindustan Times). They will complement two new infantry divisions being raised, likewise to strengthen defense in India’s northeast. Meanwhile, China has been building and upgrading transport infrastructure on the Tibetan Plateau to facilitate faster movements near the border and patrols the area aggressively. India’s Defense Ministry accuses China of making at least 350 illegal border incursions over the past several years in Arunachal Pradesh alone (Indian Defence).

The Indian Navy plans to acquire 60 new ships, submarines, an aircraft carrier, maritime surveillance aircraft, and satellites in addition to 32 vessels and six submarines being built in India over the next 10 years, according to Defense News. This suggest the country’s leadership recognizes the need for building and maintaining a strong maritime presence in the Indian Ocean as other rising powers such as China also focus on the Indian Ocean region.

Strategic backdrop

China’s increasing assertiveness in both the economic and military arenas is increasingly becoming a major factor in Indian external security planning. Pakistan’s internal chaos makes it more likely that Indian security contingencies involving Pakistan will involve non-traditional threats. In essence, Pakistan poses far greater danger as a source of terrorist attacks such as the 26 November 2008 Mumbai attacks, or refugee flows and other forms of instability emanating from natural disasters or state collapse, than it does as an entity capable of mounting conventional military operations that threaten India’s survival.

Implications

India’s defense spending boost has especially significant implications for both aerial and naval capabilities, which are key areas for ensuring India’s continued strategic position vis-à-vis a rising China that has growing interests in the Indian Ocean. Obstacles remain: nearly 60% of India’s military budget funds salaries and pensions for almost 1.2 million troops (Defense News). Also, some retired Indian military leaders criticize the spending increases as being insufficient to help India gain the ability to simultaneously fight against Pakistan and China. Like many nations’ procurement processes, India’s is subject to complex negotiations involving offsets and technology transfer and is typically slower and less efficient in practice than officially envisioned. Moreover, a variety of scandals are hampering the present government. Nevertheless, India is steadily increasing in aggregate resources and foreign procurement remains a useful alternative to the “License Raj”-style inefficiency that still plagues many areas of its defense industry. As the economy grows, we believe defense procurement spending will continue to increase meaningfully as India works to lessen its expenditure gap relative to China.

As for procurement funds, India’s Air Force will use its US$6.6 billion share to: New Delhi is now considering acquiring up to 126 modern fighter aircraft in a US$11 billion deal pitting Saab’s J-39 Gripen against the Lockheed Martin F-16, Boeing F/A-18 Super Hornet, Eurofighter Typhoon, Dassault Rafale, and Russian MiG-35 (Reuters). India’s Hindustan Aeronautics Limited is also planning to spend up to US$6-8 billion in a joint project with Russia to develop a 5th generation fighter based on the Sukhoi T-50 that would enter service around 2017, according to Indian officials quoted in the Russian media.

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