India one of top-five defence spenders
India now has the fourth largest defence budget in the world. According to a 'Defence Budgets Report' by research firm IHS Markit, only US, China and UK are ahead of India. Russia formerly used to be the fourth highest defence spender but has now slipped to sixth place. Saudi Arabia is placed at number 5 with respect to defence-spending.
Indian government upgrading defence
Since the BJP government came to power, there has been an increase in domestic manufacturing in defence goods. Currently India spends around 1.8% of its GDP on defence; a little over 1/3 of this is spent on capital acquisition; this year India spent $50.6 billion. To modernize its defence forces, India needs to spend nearly $130 billion over the next seven years.
Defence spending globally rose by 1 per cent to $1.6 trillion this year as compared to 0.6 per cent in 2015. The increase is attributed to threats posed by Russia and Islamic State terror groups in the Middle East.
Analyst Craig Caffrey on India's defence spending
"What we expect to see from 2017 onwards is a military focused on modernization. India needs new equipment to fulfill its modernization drive. Over the next three years, India will re-emerge as a key growth market for defence suppliers."
Future trends of defence spending
Experts believe that defence spending in 2016 marked a return to a healthy rate of growth. The HIS Markit report predicts that by 2018 India's defence spending will overtake Britain's to become the third-largest defence spender; this is largely attributable to India's drive to modernize defence forces. India's spending is expected to rise from $50.7 billion in 2016 to $64 billion in 2020.
China to surpass all
By the year 2020, it's been forecast that China is likely to be spending more than all of western Europe on defence. And by 2025, its defence spending likely to surpass all states in Asia-Pacific region combined.