Important Data/Facts – Defence Sector

  • Percentage of GDP spent on defence in 2020-21 – 2.1% of estimated GDP.
  • India has the second largest armed force in the world.
  • India has 15% share in global arms imports. 
  • In 2020-21, the Ministry of Defence has been allocated Rs 4,71,378 crore.   This includes expenditure for salaries of armed forces and civilians, pensions, modernisation of armed forces, production establishments, maintenance and research and development organisations.   
  • The allocation to the Ministry of Defence is the highest allocation among all ministries of the central government.  The expenditure on defence constitutes 15.5% of the central government’s budget and 2.1% of India’s estimated GDP for 2020-21.  
  • Over the last 10 years (2010-11 to 2020-21), the budget of the Ministry of Defence has grown at an annual average rate of 9%. 
  • In 2010-11, defence expenditure was 2.5% of GDP and 16.3% of central government expenditure, which has decreased to 2.1% of GDP and 15.5% of government expenditure, respectively, in 2020-21. 
  • According to the Stockholm International Peace Research Institute (SIPRI), India was the fourth-largest defence spender in absolute terms in 2018 (after USA, China and Saudi Arabia).
  • For 2020-21, expenditure on salaries form the largest portion of the defence budget (Rs 1,42,292 crore or 30% of the defence budget).  This is followed by pensions (Rs 1,33,825 crore or 28% of defence budget) and expenditure on capital outlay (Rs 1,07,233 crore or 23% of defence budget). 
  • The Dhirendra Singh Committee was set up to suggest amendments to the Defence Procurement Procedure, to facilitate the ‘Make in India’ scheme in the defence sector. The Committee submitted its Report to the Government in July, 2015. The Committee made 43 recommendations, out of which, 16 recommendations were regarding Make-in-India and 27 recommendations were regarding Defence Procurement Policy.
  • India plans to spend $130 bn on military modernization in the next 5 to 7 years.
  • 100% FDI is allowed in Defence industry; wherein 49% is allowed under automatic route and beyond 49% through Government route.

Source: https://www.prsindia.org/parliamenttrack/budgets/demand-grants-2020-21-analysis-defence