This year’s defense budget could focus on building submarines, drones, warships and aircraft carriers

  • The Indian government may not be able to fully utilize the budget it has allocated for procurement of defense equipment and weapons in 2021.
  • Strengthening the navy could be one of India’s defense ministry’s main goals as the threat from China grows.
  • India’s defense budget has remained constant at around 2% of GDP over the past five years.

The Indian government has promised to spend 19% – of the ₹4.78 crore earmarked for the defense sector – to purchase new equipment, weapons, fighter jets and others by March 2022. This money may not be fully spent as expected, a national security and defense expert told Business Insider.

The money could be poured into a corpus and should be spent next year, according to Sameer Patil, a senior researcher at ORF, who also believes that the upcoming February 1 budget could focus more on strengthening the Indian Navy. .

Not just Patil, fellow national security analyst Bhartendu Singh also believes that while India’s defense allocation will increase in absolute terms, it may remain low as a percentage of gross domestic product (GDP). India’s defense budget has remained stable at around 2% of GDP for the past five years. Even if the recommended share is 3%.

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Here’s why India needs to strengthen the navy

With India constantly battling China on its land borders, this year’s budget could focus on building up and modernizing its forces at sea. That’s largely because the Chinese threat in the Indian Ocean also increased simultaneously, according to Patil.

Commodore Anil Jai Singh, a submarine veteran, also raised concerns over China’s ‘donation’ of a 035 Ming class diesel-electric submarine – the oldest class of submarine. of Chinese inventory – in Myanmar last month. China has strengthened its presence in the Indian Ocean even before the Galwan clash in 2021, Patil added.

Some steps are already visible. “We have seen that L&T and Mazagon Shipyard have been shortlisted as India’s strategic partners for building the next set of submarines,” Patil added. This project – which aims to build P75i submarines – is expected to see an investment of up to ₹45,000 crore.

India’s armed forces are also looking to defend themselves by developing anti-submarine warfare capabilities, buying more maritime surveillance drones and building a fleet of 300 for the Indian Navy.

According to Elara Capital’s report released in October 2021, the Indian Navy fleet has 150 ships and submarines, and the Coast Guard fleet has 130 ships. Each of these ships is expected to grow to 200 ships by 2027. Orders are expected to be placed for 165 warships in the medium term, the report adds.

Indian government enterprise Garden Reach Shipbuilders & Engineers (GRSE), in its red herring prospectus, pointed out that the estimated capital budget of the navy till 2027 is expected to be ₹4.5 lakh crore.

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If indeed Finance Minister Nirmala Sitharaman is planning higher spending on the Navy, these are some of the stocks to watch on Budget Day.

Store Change in the last month
Naval dependency -2.7%
Cochin Shipyard 4.98%
Garden Reach shipbuilders and engineers 16.52%
Bharat Electronics 6.26%
Paras Defense 5.28%
Hindustan Aeronautics Limited 14.15%

Source: BSE


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