The larger budget may not be enough to buy 126 new fighter aircraft for the Indian Air Force (IAF) at the cost of $26 million each, or for the French `Scorpene' submarines for the Indian Navy. Thats because spending on new weapons is less than last year.
India, one of the world's top arms importers, is currently negotiating $2 billion worth purchases, including six submarines from France, long range `Smerch' rocket system from Russia and low-level transportable radars. India is also looking into buying the American Patriot anti-missile system.
More than 75 percent of the Indian defense budget is spent each year on wages, pensions and maintenance of the military. In the budget approximately $6.67 billion will go for pay and allowances for the armed forces personnel. This along with pensions also includes housing and maintenance. The rest will likely go towards paying off a string of deals which were cleared in recent years including aircraft carrier Admiral Gorshkov from Russia, `Phalcon' airborne radars from Israel and `Hawk' advance jet trainers from Britain.
Weapons and construction constitutes 41.4 per cent of the total defense budget, and parliament is reluctant to increase this. The Indian defense ministry has also supports the Defense Research and Development Organization (DRDO) with a 21.1 percent larger budget for developing new weapons for all the services.
Funding of the Army has been boosted up by 12.3 per cent to $ 6.93 billion from last year's $ 6.18 billion. The naval allocation has been boosted to $ 1.34 billion from $ 1.18 billion and that of IAF to $ 2 billion from last year's figures of $ 1.88 billion. HUMA
India recently announced a $18.5 billion defense budget for the next fiscal year (2005-06). This is an eight per cent increase over last year. That was on top of a 17 percent increase over the previous year. Currently, Indian defense spending is about 2.5 per cent of GDP. This is still is lowest in the region. Pakistan and China's Defence expenditure amount to five per cent and eight per cent respectively.