The single most significant factor for arms sales to have increased in 2023 is the Ukraine War. It’s also the factor that continues to drive arms sales in 2024. Beyond Ukraine, it’s the lack of stability in West Asia and the growing intent of the governments of mostly oil-reach states to enhance their military capabilities that drive the global expenditure on arms and weapons to continue to rise steadily. The SIPRI Report on expenditure for arms globally also reflects a ninth consecutive year of the graph of spending on defence surging up, with a 6.8% increase in 2023. In comparative terms, 2023 is also the steepest year-on-year rise since 2009.
The Indian story is also an interesting study. India, in 2023, earned the 4th position globally, the list being led by the US, with China and Russia being next in order. Saudi Arabia follows India, a fact that not only reinforces the deduction that the nation is trying to go beyond the US umbrella and be an equal partner of the latter, but also signifies a significant shift in global power dynamics. In GDP terms, Saudi Arabia is also a big spender at 7.1 per cent. Amongst the top five spenders, India, at 2.4 %, ranks 4th, while Russia, at 5.9%, leads by quite a margin. The steepest allocation in GDP terms is Ukraine, with the military consuming 37% of its GDP.
China: The Biggest Military Spender
Of more interest is the Chinese expenditure. Data about China has always been difficult to access and assess due to a lack of transparency. The SIPRI report states that the Chinese budget for its forces in 2023 was US$ 296, less than a third of the US budget. An American senator revealed in September 2023 that the US government estimates that the Chinese budget is actually at about US$ 700 bn. According to the SIPRI report, this year’s budget is a 6% rise over the previous year. The Indian defence budget for 2023 has been reflected as US$ 83.6 in the report, which is less than a third of the Chinese budget.
China is the biggest military spender in the Asian continent. However, the growth rate of Chinese military expenditure has experienced a downward trend in the past decade. This is not solely due to strategic decisions but also a result of complex economic factors. China has mostly limited its annual defence spending increase to single-digit terms in the decade 2014 to 2023 as compared to double digits earlier. The Chinese economy’s slow growth, unproductive funding of the Belt and Road projects that have either suffered a time lag or turned unprofitable, inability of countries hosting BRI projects to repay their loans, the housing bubble at home, have, put-together, led to a slowdown and affected Chinese defence spending. As a percentage of GDP, the Chinese defence budget since 2010 has been in the region of 1.6 0 to 1.73%, highlighting the intricate relationship between economic stability and military expenditure.
However, Xi Jinping’s ambitions require heavy expenditure on military modernisation. If the Chinese want to wrest Taiwan, get deeper west in Ladakh, and continue with the idea of Arunachal Pradesh in India being theirs, the pace of military prowess growth is a mandatory prerogative. In addition, they want to rule the South China Sea and settle territorial disputes with most of the countries of the region by force. A US$296 bn budget may be inadequate for so many of Xi’s desired end states.
The Chinese are also already the biggest Navy, are in the process of adding aircraft carriers and submarines, and claim to have stealth fighters, too. They are also increasing their holdings of nuclear weapons, testing long-range ballistic missiles, and developing air-launched aircraft carrier killer ballistic missiles. They also want to be the bigger power in space and have progressed substantially with AI. Such ambitious projects need sustained funding. Under the circumstances, it’s difficult to go by the Chinese Communist Party’s figures of US$ 296 as the Defence expenditure for 2023.
Russia and Ukraine War
The SIPRI report about Russia and Ukraine is entirely on the expected lines. Russia ranks as the third largest spender with a budget of US$ 109 bn. Ukraine has jumped up a couple of notches compared to 2022 to be placed 8th with an estimated spend of US$ 64.8. As a share of GDP, the Ukrainians ride amongst the top few, with 37% spent on defence. The Russian expenditure was 5.9% of its GDP. The Ukranian increase is 11 % higher than its 2022 figures, while the Russians have spent 1.2 % more.
Russia has maintained the pace of its defence expenditures, and its economy is doing better than expected despite the sanctions. Russian military spending in 2023 was 57% higher than in 2014 when it annexed Crimea.
Indian Scenario
The Indian defence expenditure of US$ 83.6 bn is 4.2% higher than last year. The increase is primarily due to expenses on personnel and pensionary commitments that have become a bane for Indian forces. The government has attempted to grapple with the situation by implementing a new entry scheme for recruits, akin to a tour of duty approach. The scheme allows retention of only 25% of the recruits beyond four years of service. With these new rules in vogue, pensionary expenditure would be reduced. However, the same may not hold for operational capabilities.
The Indian forces are also pursuing atmanirbharta (self-sufficiency) in a big way. Its large defence budget will consolidate the domestic defence industry ecosystem. In the interim, the budget’s sheer volume allows the Indian government to negotiate contracts with foreign partners more equitably while insisting on technology transfers and domestic production in India, wherever viable.
If India is to pursue self-sufficiency, the American experiment is worth studying. According to the SIPRI report, the biggest increase in spending in one particular category in the US defence expenditures of 2023 was in ‘research, development, test, and evaluation’. The Indian government has to fund defence research more liberally and ensure the funds are utilised efficiently.
The SIPRI report is an interesting commentary on the state of forces in various countries. With Gaza also very much in flames and the possibility of a regional flare-up in West Asia, the arms industry will continue to display better balance sheets. With the mass use of cheap systems like drones becoming more and more common, it will be necessary for the industry to come up with cheaper systems to fight the adversary and reduce the cost of war. The expenditure on ammunition will also remain high as long as the Ukraine front and Gaza remain active. Nations will have to bank on building surge capacities in the manufacturing of ammunition to meet contingencies.
Brig SK Chatterji (Retd)
