Defense budget cuts in India

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India’s defense budget limitations may affect the purchase of dual use or “pure” homeland security systems from Israel. In spite of the problem, India is trimming defense spending for its current fiscal year, which ends March 31, but Defense Minister A.K. Antony says spending on operational preparedness will not suffer.

India is determined to go forward with some major arms deals. So, for instance, the country’s Air Force chief insists that India finally will sign a long-awaited contract for 126 Dassault Rafale fighters by the middle of this year.

“The government is passing through a difficult phase,” the defense chief says. “The recession is affecting us. There will be a cut in the capital and revenue budget. However, we will not cut the expenditure on operational preparedness.”

For the current fiscal year, the Indian government has cut defense spending by about 5% from the allocated 1.93 trillion rupees ($38.6 billion), mainly due to the ongoing economic downturn. Of the allocated 1.93 trillion rupees, 1.13 trillion have gone to revenue expenditures including salaries and pensions, and 795.79 billion were earmarked for modernizing the armed forces by acquiring new assets.

Several key acquisition plans are expected to be pushed into the next fiscal year.