India needs to step up defence spending to keep up with neighbours: Antony

India’s defence minister AK Antony said a major “step up” is required in India’s defence modernization to keep up with its neighbours.

“We live in a sensitive region. We have to consider the pace at which our neighbours are modernizing… Need a substantial step-up for the modernization.. It is our stance, a balanced stand will have to be taken by the Government. This year is a very difficult year for the government,” the defence minister said at the annual Defence Expo in New Delhi.

Antony said the defence ministry is against raising foreign investment limits in defence manufacturing within India. India imports nearly all of its high-end defence equipment and many suppliers are eager to set up local units in India to cater to the demand. But Antony was opposed to the request.

“We feel it’s better to confine FDI to 26%,” he said.

Antony also said that six companies, including two from India, have been blacklisted on the recommendation of the Central Bureau of Investigation (CBI).

The six companies, including one each from Israel, Russia, Germany and Sweden, have been banned for ten years, Antony said.

The ban will apply to all ministry of defence departments, including government-owned defence companies such as Bharat Electronics Limited.

Antony pointed out that India has invited Chinese companies to the National Defence Expo for the first time.

Antony said offset amounts may grow 10 times in the next two years, but he was not sure whether the local industry will be able to absorb the amount. India has a policy of creating ‘offset manufacturing’ requirements in its defence import contracts to create jobs in the country. The offset policy will be revamped in the coming months, he said.