Defence Budget Allocation & Defence Procurement Procedure : News & Discussions

Hope they plan and spend wisely instead emergency purchase s again.
Not gonna happen. We never learn. Despite what happened last year, it would have been prudent to have numbers befitting the problem ( two fronts ) . Instead, it's a token raise given just for the sake of it. There is no way this can be used in case things go south with the Chinese and Pak. We will again see additional expenses which will be fund thrown in to do a patchwork.

Even, just for the sake of it, when we have an on going stand off with the Chinese, our FM couldn't even mention 'defence' in the parliament? What kind of message does this send out regarding our priorities?
 
So this year the capital budget was increased from 1.13LC to 1.35LC.

And the coming year, the capital budget will remain 1.35LC. So there's no effective growth unless the revised estimate sees a significant upward movement later on. I hope to see more emergency purchases this year to cover up for any shortfalls.

FY 2019 = 0.94LC
2020 = 1.05LC
2021 = 1.35LC
2022 = 1.35LC

We may see it revised to 1.4-1.5LC this year at the very least. And hopefully the next year will see a significant rise to well above 1.5LC with the revised budget adding even more to it.

Nevertheless, a 1.13 to 1.35LC increase for two consecutive years is pretty good news.
 
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So this year the capital budget was increased from 1.13LC to 1.35LC.

And the coming year, the capital budget will remain 1.35LC. So there's no effective growth unless the revised estimate sees a significant upward movement later on. I hope to see more emergency purchases this year to cover up for any shortfalls.

FY 2019 = 0.94LC
2020 = 1.05LC
2021 = 1.35LC
2022 = 1.35LC

We may see it revised to 1.4-1.5LC this year at the very least. And hopefully the next year will see a significant rise to well above 1.5LC with the revised budget adding even more to it.

Nevertheless, a 1.13 to 1.35LC increase for two consecutive years is pretty good news.
India should bite the bullet and add at least $10 billion to capital expenditure for next 15 years. With an overall budget of $400 + billion, an additional 10 billion is nothing when it comes to national security.
 
India should bite the bullet and add at least $10 billion to capital expenditure for next 15 years. With an overall budget of $400 + billion, an additional 10 billion is nothing when it comes to national security.
Wait till next year. It's officially 2022.
 
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India should bite the bullet and add at least $10 billion to capital expenditure for next 15 years. With an overall budget of $400 + billion, an additional 10 billion is nothing when it comes to national security.

I agree. But the system cannot yet handle the pressure of an unsustainable boost to the capital budget right away, because any increase in capital budget also increases the revenue budget by default.

What the govt is doing instead is reducing the price of capital procurement by going for indigenous products. So instead of importing 10, we are waiting and buying 15 for the same price. This means the forces are left waiting but the final bill is cheaper. So the leasing option and emergency purchases have been introduced to offset the delay in procurement.

Also it's about time that the boosts in capital budget that I have been expecting over the last few years begins. This year we saw a massive 18% rise in the capital budget thanks to China, and may actually grow by at least another 5-10% as the year progresses, making it a well over 20% growth. Next year and the year after could be equally big because it's about the time when a lot of indigenous programs mature, like the army's rifles, artillery, helicopter programs and the massive contracts expected for MRSAM and QRSAM. The army requires a significant boost over the next 2 years in order to fund their modernisation programs until 2028.

So, although you won't see a direct addition of $10B to the capital budget in just 1 year, you can definitely expect a pretty high double digit growth of the capital budget over the next 5-10 years, with a mix of low and high increases. The only way you can expect a big one-time boost is if we end up going to war.

By 2030, we will likely end up with a sufficiently large budget, with indigenous production having offset the large cost of imports. The govt believes we will only need half our actual capital budget if we mainly buy indigenous products and that shift began 2 years ago.
 
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I agree. But the system cannot yet handle the pressure of an unsustainable boost to the capital budget right away, because any increase in capital budget also increases the revenue budget by default.

What the govt is doing instead is reducing the price of capital procurement by going for indigenous products. So instead of importing 10, we are waiting and buying 15 for the same price. This means the forces are left waiting but the final bill is cheaper. So the leasing option and emergency purchases have been introduced to offset the delay in procurement.

Also it's about time that the boosts in capital budget that I have been expecting over the last few years begins. This year we saw a massive 18% rise in the capital budget thanks to China, and may actually grow by at least another 5-10% as the year progresses, making it a well over 20% growth. Next year and the year after could be equally big because it's about the time when a lot of indigenous programs mature, like the army's rifles, artillery, helicopter programs and the massive contracts expected for MRSAM and QRSAM. The army requires a significant boost over the next 2 years in order to fund their modernisation programs until 2028.

So, although you won't see a direct addition of $10B to the capital budget in just 1 year, you can definitely expect a pretty high double digit growth of the capital budget over the next 5-10 years, with a mix of low and high increases. The only way you can expect a big one-time boost is if we end up going to war.

By 2030, we will likely end up with a sufficiently large budget, with indigenous production having offset the large cost of imports. The govt believes we will only need half our actual capital budget if we mainly buy indigenous products and that shift began 2 years ago.


"we are waiting and buying 15 for the same price" - key word is 'waiting'. Given the current situation, can we afford to wait?
Going indigenous is fine, but it cannot happen overnight. It needs to be given time to mature and at the same time, we must procure off-the-shelf products to maintain balance. We cannot ask the army to wait for weapons while they are under attack. For the record, I am fully in favour of developing self made equipments, but it cannot be allowed to jeopardise the operational effectiveness of the military. I am not sure what the rationale is behind the approach the current government is taking. For the later part, adding the capital budget for defence can help do a patch-work, more in line with what we saw last year (purchase of systems which are required immediately to handle a short term aggression). It can in no way help modernise the army (tri-services) with the required modern equipments (as applicable) which can help us dominate any theatre.

If we talk about 2028 - 2032, may be, our own systems will be in a position to be deployed (touch wood), but what happens if all hell breaks loose within next two years? No one can rule out that possibility given the great neighbours we have. In fact, I wont be surprised, if we see a push from the Chinese in the coming summer.

Another important point - next election, given what happened before last election, Balakote strike was politicised to death and it had a major influence on the outcome of the last election. Hypothetically, if push comes to a shove anywhere near the next election, our government will not be able to say "koi andar nhi aya tha" and they will have to stand their ground. How do they plan on doing that with this kind of defence budget?
 
"we are waiting and buying 15 for the same price" - key word is 'waiting'. Given the current situation, can we afford to wait?
Going indigenous is fine, but it cannot happen overnight. It needs to be given time to mature and at the same time, we must procure off-the-shelf products to maintain balance. We cannot ask the army to wait for weapons while they are under attack. For the record, I am fully in favour of developing self made equipments, but it cannot be allowed to jeopardise the operational effectiveness of the military. I am not sure what the rationale is behind the approach the current government is taking. For the later part, adding the capital budget for defence can help do a patch-work, more in line with what we saw last year (purchase of systems which are required immediately to handle a short term aggression). It can in no way help modernise the army (tri-services) with the required modern equipments (as applicable) which can help us dominate any theatre.

If we talk about 2028 - 2032, may be, our own systems will be in a position to be deployed (touch wood), but what happens if all hell breaks loose within next two years? No one can rule out that possibility given the great neighbours we have. In fact, I wont be surprised, if we see a push from the Chinese in the coming summer.

Another important point - next election, given what happened before last election, Balakote strike was politicised to death and it had a major influence on the outcome of the last election. Hypothetically, if push comes to a shove anywhere near the next election, our government will not be able to say "koi andar nhi aya tha" and they will have to stand their ground. How do they plan on doing that with this kind of defence budget?
Modi doesn't have a Plan B or if it's there it's conspicuous by it's absence. Plan A consisted of intimidating Pakistan & milking it dry to the nation ( which seemed easy enough in retrospectb, for any action against them would be applauded coz the UPA put up a pathetic response everytime an outrage occurred) while also sucking up to China if only confronting it within limits like Doklam. Everything went according to script till last summer.

I'd venture so far as to say if the Chinese didn't show up in Ladakh we would've seen a de growth in the defense budget. There seems to be absolutely no sense of urgency or alarm to cater to a massive campaign were the Chinese to launch one in the near future. It's business as usual.
 
Modi doesn't have a Plan B or if it's there it's conspicuous by it's absence. Plan A consisted of intimidating Pakistan & milking it dry to the nation ( which seemed easy enough in retrospectb, for any action against them would be applauded coz the UPA put up a pathetic response everytime an outrage occurred) while also sucking up to China if only confronting it within limits like Doklam. Everything went according to script till last summer.

I'd venture so far as to say if the Chinese didn't show up in Ladakh we would've seen a de growth in the defense budget. There seems to be absolutely no sense of urgency or alarm to cater to a massive campaign were the Chinese to launch one in the near future. It's business as usual.

We will see a "harakiri" if we see any push in the recent future. The main point of focus for GoI is perception. If GoI thinks that it can create another positive perception & milk it for the next election, especially where the Chinese are concerned, it will be a huge gamble.
From the Chinese PoV, the current government is a major threat given how conducive the UPA were to the them, so, they will try their level best to ensure that BJP doesn't come back to power. What better way to do that than beating BJP at their own game. If India gets a sucker punch from the Chinese & the perception within India is destroyed, there is not a chance in hell that BJP will come back to power in the next election. The national security card was a major chip which was used to win the previous elections. I don't understand why this is so difficult for GoI to grasp.
They have shown zero intent so far. We continue to bring Nehru back from the graves when ever we need stuff that needs blaming, but honestly, I don't see how this GoI is any different. Losing sight of the immediate while focusing on the future is not something that a wise government will do imo.
 
I agree. But the system cannot yet handle the pressure of an unsustainable boost to the capital budget right away, because any increase in capital budget also increases the revenue budget by default.

What the govt is doing instead is reducing the price of capital procurement by going for indigenous products. So instead of importing 10, we are waiting and buying 15 for the same price. This means the forces are left waiting but the final bill is cheaper. So the leasing option and emergency purchases have been introduced to offset the delay in procurement.

Also it's about time that the boosts in capital budget that I have been expecting over the last few years begins. This year we saw a massive 18% rise in the capital budget thanks to China, and may actually grow by at least another 5-10% as the year progresses, making it a well over 20% growth. Next year and the year after could be equally big because it's about the time when a lot of indigenous programs mature, like the army's rifles, artillery, helicopter programs and the massive contracts expected for MRSAM and QRSAM. The army requires a significant boost over the next 2 years in order to fund their modernisation programs until 2028.

So, although you won't see a direct addition of $10B to the capital budget in just 1 year, you can definitely expect a pretty high double digit growth of the capital budget over the next 5-10 years, with a mix of low and high increases. The only way you can expect a big one-time boost is if we end up going to war.

By 2030, we will likely end up with a sufficiently large budget, with indigenous production having offset the large cost of imports. The govt believes we will only need half our actual capital budget if we mainly buy indigenous products and that shift began 2 years ago.

Actually there is no need to pump up the capital budget .Chinese are playing the same game we played against the Pakistan.Pakistan as usual made folly and pumped up the budget for defence and screwed their development programs .
Chinese also planning the same ,we have to know that we are not Pakistan.
Lets it be very clear.PRC is a 15 trillion $ economy with iron curtain as their face value .
Noone knows what is really going on behind that .
So we are simply not able to compete them pocket to pocket.

And to win a war you dont have to overspend anything but only need to use wisely .

We will see a "harakiri" if we see any push in the recent future. The main point of focus for GoI is perception. If GoI thinks that it can create another positive perception & milk it for the next election, especially where the Chinese are concerned, it will be a huge gamble.
From the Chinese PoV, the current government is a major threat given how conducive the UPA were to the them, so, they will try their level best to ensure that BJP doesn't come back to power. What better way to do that than beating BJP at their own game. If India gets a sucker punch from the Chinese & the perception within India is destroyed, there is not a chance in hell that BJP will come back to power in the next election. The national security card was a major chip which was used to win the previous elections. I don't understand why this is so difficult for GoI to grasp.
They have shown zero intent so far. We continue to bring Nehru back from the graves when ever we need stuff that needs blaming, but honestly, I don't see how this GoI is any different. Losing sight of the immediate while focusing on the future is not something that a wise government will do imo.

Whatever that happened in LAC has various reasons .
Confrontation will happen only if the two parties are interested in conflict .

Some reasons are historic , others are recent one.
The first reason was the Doklam issue.Chinese didnt anticipated any aggressive action from Indian side caused them to lose face at least for few years .
Second one was the revocation of article 370.
Practically Modi Govt sealed and completed one fragile part of India and as of now the internal turmoil is absolutely subsided.
It wasnt the revocation but the method they implemented ,the iron hand approach was the one that Chinese noticed .And they sensed the trouble and drive from this govt .
On the top of that border infrastructure development, their main area of concern, was accelerated.
2013 DBO incident was because of that reason and we knew the GoI kneel down in front of Chinese stopped the development work and still remembers the pathetic shivering attitude Salman Khurshid .

But this time it ended up in skirmish and AFAIK border development is going on aggressively .
Historically the grave mistake we did was that we avoided the development on border.

Only one step that can happen is a war ops from Chinese side.

But you have to agree on something.The will power and calculative approach of PM Narendra Modi .Judging from his modus operandi in administration.The man wont hesitate to mobilize the nuclear weapons if shit hit the fan.
 
"we are waiting and buying 15 for the same price" - key word is 'waiting'. Given the current situation, can we afford to wait?
Going indigenous is fine, but it cannot happen overnight. It needs to be given time to mature and at the same time, we must procure off-the-shelf products to maintain balance. We cannot ask the army to wait for weapons while they are under attack. For the record, I am fully in favour of developing self made equipments, but it cannot be allowed to jeopardise the operational effectiveness of the military. I am not sure what the rationale is behind the approach the current government is taking. For the later part, adding the capital budget for defence can help do a patch-work, more in line with what we saw last year (purchase of systems which are required immediately to handle a short term aggression). It can in no way help modernise the army (tri-services) with the required modern equipments (as applicable) which can help us dominate any theatre.

As long as it clears user trials, everything else is unnecessary. Alternate capability is also being formed at the side anyway. For example, we are buying Rafales alongside LCAs. One proven, one not.

Similarly I have supported buying ATHOS alongside ATAGS for the same reason you have outlined.

Once a milestone has been reached in the development of a particular system, then imports are not necessary. For example, due to the success of Akash, future imports of SAMs are no longer required once the MRSAM program is complete. All future SAMs can be indigenous. Also why we have numerous SAM programs running in parallel now. The same thing's happening with other weapons, primarily in precision weapons and missiles.

If we talk about 2028 - 2032, may be, our own systems will be in a position to be deployed (touch wood), but what happens if all hell breaks loose within next two years? No one can rule out that possibility given the great neighbours we have. In fact, I wont be surprised, if we see a push from the Chinese in the coming summer.

That requires emergency purchases and leasing options. Rafale came in due to emergency operational requirements. Whereas IN is pushing for 15-18 SHs through the leasing option. They also got 24 MH-60s the same way as the IAF's Rafales. IAF is pushing for the A330 through lease as well. Then there's the army's Apaches, which were pushed through via FMS with the US, and many more are needed.

Similarly plenty of weapons and other systems are needed on emergency basis for immediate use, like those SIG 716 rifles. We also need Derby ER, hopefully that's already gone through.

Whatever new that we can use in the next 2 years will have to come in through these two processes. It's impossible for it to happen quickly through the normal procurement route.

Another important point - next election, given what happened before last election, Balakote strike was politicised to death and it had a major influence on the outcome of the last election. Hypothetically, if push comes to a shove anywhere near the next election, our government will not be able to say "koi andar nhi aya tha" and they will have to stand their ground. How do they plan on doing that with this kind of defence budget?

I believe economy will be the main driver behind Modi's election campaign, not war. I don't think a war in 2021 will effect elections 3 years down the line. The Kargil victory didn't help Vajpayee's election campaign since most of the voters are not involved enough to care that much about our neighbours. Plus any action against China can be spun to favour the govt regardless of the outcome since the objectives of any war with China is not understood by the public. The Chinese have to practically take over all of Ladakh for the public to even understand what happened, and I doubt the Chinese are in a position to do that even with our current force structure.

Simply put, the army has the ability to stand their ground, even take some Chinese-controlled land if necessary, even if the IAF is unable to breakthrough Chinese defences. And the IAF has enough ability to perform air defence and support ground troops with their current inventory. And this is today, not necessarily 2 years down the line. Two years down the line, our current procurement will provide us a significant advantage over the Chinese in a limited war in one sector. IMHO, by 2023, we will be ready to fight a limited war on our terms with China based on our current rate of procurement and infrastructure buildup.
 
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Actually there is no need to pump up the capital budget .Chinese are playing the same game we played against the Pakistan.Pakistan as usual made folly and pumped up the budget for defence and screwed their development programs .
Chinese also planning the same ,we have to know that we are not Pakistan.
Lets it be very clear.PRC is a 15 trillion $ economy with iron curtain as their face value .
Noone knows what is really going on behind that .
So we are simply not able to compete them pocket to pocket.

And to win a war you dont have to overspend anything but only need to use wisely .

Pretty much. Our current procurement gives us advantages in a few geographies and that's enough to create deterrence in the minds of the Chinese.

There's no point in the Chinese attacking us somewhere and doing well there only to lose elsewhere, like the advantage we have gained around Chushul. That's pretty much a loss for them.
 
As long as it clears user trials, everything else is unnecessary. Alternate capability is also being formed at the side anyway. For example, we are buying Rafales alongside LCAs. One proven, one not.

Similarly I have supported buying ATHOS alongside ATAGS for the same reason you have outlined.

Once a milestone has been reached in the development of a particular system, then imports are not necessary. For example, due to the success of Akash, future imports of SAMs are no longer required once the MRSAM program is complete. All future SAMs can be indigenous. Also why we have numerous SAM programs running in parallel now. The same thing's happening with other weapons, primarily in precision weapons and missiles.

The point is not only the capability but having them in required numbers. How do you think our production lines will fare?
Having technical know-how and being able to develop them at a very fast pace are two very different ball game.
Also, regarding SAMs, where do you put our current investment in S400's ? Are our own systems close to the capability & performance of S400?


That requires emergency purchases and leasing options. Rafale came in due to emergency operational requirements. Whereas IN is pushing for 15-18 SHs through the leasing option. They also got 24 MH-60s the same way as the IAF's Rafales. IAF is pushing for the A330 through lease as well. Then there's the army's Apaches, which were pushed through via FMS with the US, and many more are needed.

Similarly plenty of weapons and other systems are needed on emergency basis for immediate use, like those SIG 716 rifles. We also need Derby ER, hopefully that's already gone through.

Whatever new that we can use in the next 2 years will have to come in through these two processes. It's impossible for it to happen quickly through the normal procurement route.

Again, the emergency procurements can do a patch work. According to you - leasing and buying few stuff here and the few stuff there, will that make our defence forces comfortable against a Chinese push? I will put it in a different way here - what are the objective(s) of the Chinese in Ladakh?
A naive analysis says that, they want to keep our both fronts active thereby draining us, resources which otherwise could have been utilised better are being put to maintain a huge army at that altitude. Also, do they have any long term plan? I have put up my analysis in the last post itself, so wont repeat it.

I believe economy will be the main driver behind Modi's election campaign, not war. I don't think a war in 2021 will effect elections 3 years down the line. The Kargil victory didn't help Vajpayee's election campaign since most of the voters are not involved enough to care that much about our neighbours. Plus any action against China can be spun to favour the govt regardless of the outcome since the objectives of any war with China is not understood by the public. The Chinese have to practically take over all of Ladakh for the public to even understand what happened, and I doubt the Chinese are in a position to do that even with our current force structure.

Simply put, the army has the ability to stand their ground, even take some Chinese-controlled land if necessary, even if the IAF is unable to breakthrough Chinese defences. And the IAF has enough ability to perform air defence and support ground troops with their current inventory. And this is today, not necessarily 2 years down the line. Two years down the line, our current procurement will provide us a significant advantage over the Chinese in a limited war in one sector. IMHO, by 2023, we will be ready to fight a limited war on our terms with China based on our current rate of procurement and infrastructure buildup.

There is one thing that has remained constant with BJP administration, that is the focus on national security.
When you say - "Simply put, the army has the ability to stand their ground, even take some Chinese-controlled land if necessary, even if the IAF is unable to breakthrough Chinese defences" - do you also take in to consideration the duration? In a short conflict, yes, but what happens if it drags on for some time.

"Two years down the line, our current procurement will provide us a significant advantage over the Chinese in a limited war in one sector" - basing our defence on the assumptions that they will do it in one sector, that too, two years down the line? What happens if it happens this summer and in multiple sectors?

My opinion -

A defensive posture is not going to cut it. The Chinese need to be evicted from those lands, unless that happens, they will keep prodding us.
That needs both political will as well as proper military infra, a situation where the army feels comfortable going forward with an assault.
Unfortunately that is not possible with what the army is given to fight with.
 
The point is not only the capability but having them in required numbers. How do you think our production lines will fare?

That will be fine. We are capable of mass production.

Having technical know-how and being able to develop them at a very fast pace are two very different ball game.
Also, regarding SAMs, where do you put our current investment in S400's ? Are our own systems close to the capability & performance of S400?

There's time to develop these things because we are already importing our current requirement. Can we develop our own Rafale today? Yes. But by the time it's developed it will be well beyond 2030, hence the need to import our current requirement. The same with the S-400 and MRSAM, we have the capability to develop these but won't be operational for quite some time even if we start now. But what is assured is we don't need to import anything beyond that now.

Our upcoming systems are far superior to the S-400. AESA radars, AESA seekers, modern missiles etc.

Again, the emergency procurements can do a patch work. According to you - leasing and buying few stuff here and the few stuff there, will that make our defence forces comfortable against a Chinese push? I will put it in a different way here - what are the objective(s) of the Chinese in Ladakh?
A naive analysis says that, they want to keep our both fronts active thereby draining us, resources which otherwise could have been utilised better are being put to maintain a huge army at that altitude. Also, do they have any long term plan? I have put up my analysis in the last post itself, so wont repeat it.

Emergency purchases will help us in any situation except all-out war. Take the example of Rafale. Since there's trouble in Ladakh, we can move all 36 Rafales there and that's more than enough to take care of that entire sector and more. If the Chinese create trouble in AP, then we can move the Rafales to the NE. So 36 Rafales fulfills half our needs. Add another 36, it can take care of both fronts simultaneously. Similarly, the S-400 also caters to half our needs.

All of this considers long term planning of the Chinese as well. The 36+36 Rafale and 5+5 S-400s can take care of our needs for at least 15 years.

If you are referring to deployment, then that seems to be permanent as long as both sides share the border or a solution is not found.

Anyway what you're referring to in most places has nothing to do with the defence budget.

There is one thing that has remained constant with BJP administration, that is the focus on national security.
When you say - "Simply put, the army has the ability to stand their ground, even take some Chinese-controlled land if necessary, even if the IAF is unable to breakthrough Chinese defences" - do you also take in to consideration the duration? In a short conflict, yes, but what happens if it drags on for some time.

A limited war is unlikely to drag on for long, but yeah, our current inventory is enough for even a long term engagement.

If it goes all-out, which is unlikely within the next 2 or 3 years, possibly not even this decade, it's going to be a problem. But I think the govt has taken such things into account when deciding the modernisation plan. China is not expected to fight a major war with anyone until PLAN comes up to the level needed to challenge the US. The Chinese have shown so much strategic patience and restaint for so long that it's unlikely for them to just throw it all away for piecemeal advantages.

They have been keeping their heads down since 1980 and biding their time until they can challenge the US. Any goof up before they are ready can set back their plans by 20 years because what the Chinese have taken 40 years to build, the US can simply demolish it all within a week.

"Two years down the line, our current procurement will provide us a significant advantage over the Chinese in a limited war in one sector" - basing our defence on the assumptions that they will do it in one sector, that too, two years down the line? What happens if it happens this summer and in multiple sectors?

Any shooting match this summer is unlikely to conflagrate into a wider conflict. Even the Chinese are not prepared. They may create trouble, but they don't want to put themselves in a position where they might lose face. For example, even if they perceive they have an advantage in Depsang, they might lose land around the two lakes. They can't afford such a move.

Plus we now have 2 strike corps arrayed against China in some capacity. Even without the IAF being prepared, the SCs create a much greater deterrence than the Rafales and S-400.

My opinion -

A defensive posture is not going to cut it. The Chinese need to be evicted from those lands, unless that happens, they will keep prodding us.
That needs both political will as well as proper military infra, a situation where the army feels comfortable going forward with an assault.
Unfortunately that is not possible with what the army is given to fight with.

We do not have a defensive posture with China, it's offensive-defence. The 36 Rafales and 2 SCs can take the fight to the enemy.
 

Reforming Defense Procurement: Lessons from France

Is it possible to generate more efficient outcomes with respect to public procurement in general and defense acquisition in particular? Or are cost overruns inevitable when it comes to major engineering projects, like the development of modern weaponry? In this article, we draw on a unique data set of nearly 50 French armaments contracts in order to examine how one government has reformed its defense acquisition process over the past twenty years. Beginning in the early 1990s, France embarked on a series of policy reforms that enabled the state to contain skyrocketing weapons costs. We emphasize three, inter-related aspects of the defense acquisition environment in France that favored cost containment: first, hard budget constraints; second, the great technical capacity that the French government brought to bear on the weapons acquisition process, coupled with its iterative relationship with a small number of suppliers; and third, the use of contracting techniques that empowered project managers.