IHS forecast India to be fourth biggest defence spender by 2020, with estimated USD65.4 billion budget

Defence spend expected to re-accelerate after a slow down between 2012-2014

Friday, February 8, 2013 11:48 am EST

LONDON, (8 February, 2013) - IHS (NYSE: IHS), the leading global source of information and analytics, forecasts that India will become the fourth biggest defence spender in the world by 2020 behind the U.S., China and Russia - surpassing France, Japan and the U.K. over the next eight years.

IHS Jane's Defence Budgets projects that India's defence spend will reach USD65.4 billion in 2020 despite cuts announced by India's defence minister in January 2013 caused by the challenging economic and fiscal climate.

This obstacle is expected to wane over the next three years, with IHS expecting India's gross domestic product (GDP) growth to recover to rates of around eight per cent by 2015 - allowing India's plans for increasing defence spend to recover from 2015 to 2020.

Based on current projections, IHS expects the Indian defence budget, including related pensions obligations, to reach USD 55.6 billion over the five years to 2017, with the procurement budget increasing to USD14.9billion.

Craig Caffrey, senior Asia Pacific analyst, IHS Jane's Defence Budgets, comments: "The economic growth that fuelled increasing defence spend in recent years faltered in 2012 and that's what forced the government to re-visit its spending assumptions. Defence spend as a percentage of GDP is actually projected to continue to fall through to 2020, but that will still allow for significant real growth in dollar terms. We anticipate that India's defence spend will overtake France in 2016, the UK in 2018, and Japan in 2020. By the end of the decade, India is expected to be spending up to USD 17.4 billion on the procurement of defence equipment each year."

James Hardy, Asia-Pacific editor, IHS Jane's Defence Weekly, comments: "India continues to be a major market for the international defence industry, with major investments in all three services and its strategic missile forces. While short-term budget cuts will have an effect on these procurements, India's geostrategic position and the parlous state of much of its inventory means that it will continue to invest in new fighter aircraft, attack helicopters, howitzers, submarines and aircraft carriers, to name but a few of its many programmes."