India to remain a major arms market: experts

"If I were appointed dictator of India, I would surrender critical mass, economies of scale and all the other considerations that dog Indian defence. I would just concentrate on creating competition and more competition," said Prof Edward Luttwak, a highly respected defence economist and former advisor to the US Administration on defence, at a seminar on 'Defence Economics and Finance' organised by the Department of Defence Finance today.

Speakers at the international seminar focused on this issue in different ways. They said India would continue to be a big defence market in the future even though the nature of the threats confronting not just India but the whole world had changed.

Elisabeth Skons from the Stockholm International Peace Research Institute (SIPRI) said world military expenditure was increasing rapidly and approaching the levels of the Cold War.

Over the last ten years, the strongest increase in military expenditure had taken place in the poorest countries and the lowest increase in the richer countries.

The composition of military spending differed between low income and high income economies, with the lower income countries tending to spend a higher share of the total on personnel and other operating costs while higher income nations spend more on arms procurement and military research.

However, all speakers agreed that the new security environment and reconceptualisation of security required new policy instruments to address security.

Luttwak said there were several paradoxes in the acquisition of military equipment the world over. Although, research in IT had made weapons more efficient and cheaper, the armaments industry was collectively costlier than it had ever been.

The reason was the fact that wars had come down in the world. Indeed, after the short gap between the two world wars, there had been no real engagement of that scale since and, therefore, economies of scale in armament manufacturing pushed up the price.

As the market for these systems was limited, monopolies had tended to develop. This had resulted in high costs and had slowed down innovation, leading to a plethora of problems including forcing nations to buy weapons systems they did not want with specifications not designed for their requirements. Configurations had been frozen since 1945.

However, there was another problem, Luttwak said. Configurations had been frozen since then and the research and innovation done on weapons systems had as its basic model, the tried and tested weapons used in world war II. This could only be resolved if there was more competition.