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Focus: GS-III Indian Economy, Internal Security Challenges

Why in news?

With Army taking a decision to order another 72,400 assault rifles from Sig Sauer of the U.S., domestic small arms manufacturers have expressed concern over continuing imports.


  • The official said Indian companies are not considered for deals through Fast Track Procurement (FTP), which is limited to foreign vendors currently.
  • Under a ₹700 crore deal with Sig Sauer of the U.S., the Defence Ministry procured SIG-716 assault rifles through FTP.
  • The remaining demand of over 7 lakh rifles was to be met through the licensed manufacture of Russian AK-203 rifles in India through a joint venture with the (OFB) Ordnance Factory Board (the final deal has been stuck over the issue of pricing).
  • The Army has been attempting to replace the indigenous INSAS (Indian National Small Arms System) rifles with a modern rifle.
  • In the last few years, several Indian companies have invested in the small arms segment, given the large requirement and efforts by government to open up ammunition to the private sector and have started production as well.
  • However, without any major order from the armed forces, many companies are looking for smaller orders from police and Central Armed Police Forces (CAPF).

Military budget of India

  • In the 2020 budget – the allocation for defence during the fiscal year 2020-21 stood at more than Rs. 470 thousand crores, this amounted to an increase of just below 7%.
  • The Indian Army accounts for more than half of the total defence budget of India, with most of the expenditure going to the maintenance of cantonments, salaries and pensions, instead of critical arms and ammunition.
  • It may be seen from data of economic survey that Defence Budget as a percentage of GDP may appear to be decreasing due to increasing trend in the growth of GDP. However, it is increasing in absolute terms, implying higher spending.

India’s Defence Imports

  • India was the world’s second-largest arms importer from 2014-18, ceding the long-held tag as largest importer to Saudi Arabia, which accounted for 12% of the total imports during the period.
  • However, Indian imports decreased by 24% between 2009-13 and 2014-18, partly due to delays in deliveries of arms produced under licence from foreign suppliers, such as combat aircraft ordered from Russia in 2001 and submarines ordered from France in 2008.
  • Russia accounted for 58% of Indian arms imports in 2014–18, compared with 76% in 2009-13.

-Source: The Hindu

February 2024