This issue analyses two important aspects the Defence Budget and Defence manufacturing growth and its relevance in our context.

The resource allocation for defence, is completely from the central government and has to be in conscience with the current status and priorities in the Indian defence sector. Although the 2015-16 defence budget comes in the backdrop of some visible improvements in key indicators of the Indian economy, the modest increase of around eleven per cent does not seems to meet the requirements. Considering that defence manufacturing, particularly by the private sector, needs substantial investment on plant and machinery, technology and skill development, lack of a defence-specific 'Make in India' initiative is of concern. At the same time, tax and duties structure also need to be made attractive for in-house manufacturing. Whereas it is agreed that the defence planners continue to make plans without regard to the availability of resources, but the short-term focus on defence and crisis management may not be right approach.

Investment in Defence industry involves huge investment and long gestation period; also need economies-of-scale to achieve success. It typically needs buyers of its product, to be competitive and to sustain business. This can be achieved only when both domestic and export markets are easily accessible for industry. In our case the domestic and export market size and share reflects the sustainability and competitive edge of an industry. Indian GDP projected growth of 9-10% YoY, can be achieved provided manufacturing sector grow 14-15% backed by export growth to the tune of over 20%. This kind of increase in growth and export need to be there in defence manufacturing as World over exports is a matter of economical survival for the defence industry.

In such a scenario the Govt has to open the closed Box. Welcome sign is the Strategy for Defence Exports (SDE), sheds the past reluctance in promoting arms exports through active defence diplomacy, have listed certain measures and promised inclusion of defence industry representatives in India's official delegation for bilateral meetings. It is a practical document for promoting exports and contributing to the GDP of the economy through enhanced defence exports. The challenge will be implementation through mechanisms, transparency and strict monitoring to overcome time delays, budget overruns, red tape and corruption.

Maj Gen Dr. Bhupinder Yadav (Retd.)

Maj Gen Dr. Bhupinder Yadav (Retd.)

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