FrontCover_June-2018.qxd 6/26/2018 1:53 PM Page 1 1-content.qxd 6/29/2018 1:46 PM SUSHIL Page 2 CONTENTS BUDGET 2018: 02 HOW HAS IT HELPED DEFENCE? A TIMES OF INDIA In this Anniversary PRESENTATION Special Issue, we l MANAGING EDITOR take a look at how VISHESH PRAKASH Defence Budget l ASSISTANT EDITOR 2018-19, announced POOJA MADHOK in February, has l EDITORIAL TEAM YASMIN TAJ helped the Defence DIPIKA RATHI KAMINI KULSHRESHTHA sector in the first l CHIEF GRAPHIC EDITOR quarter MUKESH ARORA l DESIGN TEAM MAHESH BISHT, DINESH VIST, THE FOCUS NOW IS ON SUSHIL DUBEY THE STORY OF DEFENCE 24 INDO-PACIFIC MARKETING 8 INDUSTRIAL CORRIDORS l NATIONAL VERTICAL HEAD Let’s explore the ‘Indo- SHWETA ARORA Pacific’ and the [email protected] While the government has proposed to set up two defence ‘Quadrilateral Security l PROJECT COORDINATOR PEEUSH SRIVASTAVA corridors, it must consider Dialogue’ [email protected] private sector as a stakeholder l PRODUCTION COORDINATION in defence production MUKESH MALIK UTTAM ACHARYA Published by: Rajeev Yadav for the proprietors, Bennett, Coleman & Co. Ltd., at Times House, 7 B.S.Z. Marg, New Delhi and printed by him at Amar Ujala Publications Ltd., C - 21 & 22, Sector - 59, Noida - 201301, (UP) - India All rights reserved with M/s Bennett, Coleman & Co. Ltd. Reproduction, in whole or part, without written permission of the publisher is prohibited. Infringement of any of the above conditions can lead to civil and criminal prosecutions. ARTIFICIAL INTELLIGENCE & DISCLAIMER: Great care has been taken in the 12 UNMANNED AIRCRAFT compilation and validation of information, and every effort has been made to ensure Our country needs to prepare that all information is up-to-date at the INDO-US time of going to press. The publishers are itself for the next generation 28 RELATIONSHIP not responsible for errors, if any, and their warfare. The role of AI is thus consequences. Over the years, Indo-US 2018 Copyright © Bennett, going to be crucial for India Coleman & Co. Ltd relationship changed from forced friendship to Pictures used in the magazine are for representational purposes only. a genuine camaraderie TAKING INDIAN 36 AVIATION TO SAFER GROUNDS Steady growth in air traffic in the past few years is an indicator of EXPANDING TURBULENT sound economic 18 MARITIME PERIPHERY activities. It is time now to take the business of In the strategic landscape aviation safety seriously of Indo-Pacific, China can be seen both, as an opportunity as well as a key challenge 2-7_Cover_story_6done.qxd 6/29/2018 12:47 PM SUSHIL Page 2 COVER STORY r By A Correspondent n what can be a termed as a ‘strategic’ move, India’s defence budget for 2018-19 has been increased by 7.81 per cent. While India faces Budget 2018: military threats from both Pakistan and China, whether or not the defence ‘outlay’ is likely to Imeet the overall requirements of the defence services is for time to tell. As of now, let’s explore how the first HOW HAS IT quarter has been like. CATEGORY WISE ALLOCATION The Union Budget for 2018-19 envisages a total outlay of `24,42,213 crore. Out of this, `2,95,511.41 crore has been HELPED THE earmarked for the defence sector. This accounts for 12.10 per cent of the total central government expenditure for the year 2018-19. The defence outlay works out to just about 1.58 per cent of the GDP for 2018-19, the lowest such figure since the 1962 war with China, wherein it was 1.65 per cent. The fresh allocation of `2.95 lakh crore represents a growth of 7.81 per cent over the budget DEFENCE? estimates (`2.74 lakh crore) and 5.91 per cent over the revised estimates (`2.79 lakh crore) for the financial year 2017-18. Out of `2.95 lakh crore, `1,95,947.55 crore has India’s defence budget for 2018-19, announced in been allocated for revenue expenditure and `99,563.86 February, was increased by 7.81 per cent to `2.95 crore for capital expenditure for the defence services and departments under the ministry. The capital outlay also lakh crore over last year’s `2.74 lakh crore. Four includes the modernisation expenditure. For defence pension, which is over and above the outlay months down, let’s explore how it has helped the mentioned above, an amount of `1,08,853.30 crore has defence sector in the first quarter been provided in the Budget Estimates 2018-19. This is 26.60 percent above the Budget Estimates 2017-18 of `85,740 crore and 14.26 percent over revised Estimates 2017-18 of `95,000 crore. INFRASTRUCTURE BOOST The good news also is that the infrastructure for connectivity in border areas is being developed. This is part of India’s defences in these remote areas. Rohtang 2 | ET Aviation & Defence | June 2018 June 2018 | ET Aviation & Defence | 3 2-7_Cover_story_6done.qxd 6/29/2018 12:47 PM SUSHIL Page 4 However, more money should have Between these two places, all small and for a Technical Communication System been allocated for border connectivity. medium manufacturers will be has been long delayed due to the benefitted. The second corridor will be internecine fight between defence PSU EMPHASIS ON ‘MAKE IN INDIA’ announced later. and the private players. The futuristic Defence budget has also laid emphasis The ‘Make’ category under Defence infantry combat vehicle, another on the private investment in defence in Procurement Policy (2016), also flagship ‘Make’ initiative is also stick India. Measures to develop two defence promises to provide 80 per cent due to the complex procedure that the industrial production corridors in the funding for private sector players who ‘Make’ category entails, compared to an country have also been stressed upon. can develop a successful policy catering import option. The government will also bring out an to defence acquisition requirement. industry-friendly Defence Production This provision has also been buried A HOLISTIC PICTURE Policy 2018 to promote domestic under the myriad of promises to The total allocation to ministry under production by public sector, private promote indigenous R&D and various demands for grants during sector and MSMEs. The first defence manufacturing. 2018-19 has been placed at `4.04 lakh corridor will be established in Tamil In this backdrop, mention may be crore, which constitute 16.4 per cent of Nadu, linking Chennai and Bengaluru. made how an ambitious ‘Make Project’ central government expenditure and Tunnel has been completed to provide Tawang and will also ensure that the all weather connectivity to the Ladakh stretch from Bomdila to Tawang region. Contract for construction of remains open throughout the year. Zojila Pass tunnel of more than 14 km Apart from this, several border is progressing well. More importantly, roads are being given priority. The construction of tunnel under Sela Pass budget has taken border roads, is also expected to be proposed soon. tunnels, strategic projects and the It seems that the defence budget has defence industrial corridor into taken into account all that has been consideration. requested. The expected construction In relation, the army had re- of the tunnel under Sela Pass, which is prioritised its five year plan for 2018- located near Tawang, shows that the 2023 to meet its operational The corridors of priority is being given for the defence requirements along the frontier with ‘growth’ planned of the North East and access to such China. The emphasis is on Defence budget has laid points, which are critical for defence. infrastructure development such as emphasis on the private Tawang is an important strategic building better road connectivity, more investment in defence in India. location for the Indian Army. It was a fuel storage facilities and troop Measures to develop two primary location where the 1962 accommodation. The Indian Army is defence industrial production India-China war was fought. From already looking at building capacities corridors in the country have Tawang, the LAC in Bumla is not far to move forces between sectors along been stressed upon located. Reaching Tawang by road is an the LAC and from the western front to arduous journey through bad road the northern front. connectivity. The Sela tunnel is Experts feel that the Sela Pass expected to reduce the road distance to tunnel is a step in the right direction. 4 | ET Aviation & Defence | June 2018 June 2018 | ET Aviation & Defence | 5 2-7_Cover_story_6done.qxd 6/29/2018 12:48 PM SUSHIL Page 6 Budget 2018-19: At a glance The Union Budget for 2018-19 has earmarked `2,95,511.41 for defence. This accounts for 12.10 per cent of the total central government expenditure for the year 2018-19 The infrastructure for connectivity in border areas is being focused upon and is going to be developed at a fast pace. This is part of India's defences in the remote areas The budget has also taken border roads, tunnels, strategic projects, fuel storage facilities, and the defence industrial corridor into consideration 2.2 per cent of India’s GDP. This includes `1.08 lakh crore Force (23 per cent), which is most capital intensive in in pension payment to nearly 2.5 million pensioners. Of nature and Navy (15 per cent). DRDO has been historically the total defence expenditure, 34 per cent is accounted for accounting for 6 per cent of the defence services; though by capital expenditure, which includes land acquisition, the Defence Standing Committee (2008) had construction of new buildings, roads and acquisition of recommended that at least 10 per cent should be new weapons and platforms.