Nonetheless, longer-term budgetary prospects have improved and are expected to strengthen further over the next five years. The Indian defence budget is expected to reach $64.8 billion by 2020 with procurement expenditure expected to grow faster than overall spending, according to IHS Jane's Defence Budgets.

"The strain on the equipment budget was inevitable given the pressures of OROP and the seventh pay commission, but we should now see a period of sustained growth in procurement spending," said Caffrey.

Increases in capital expenditure will be driven by extensive modernisation requirements across the Indian armed forces. IHS has observed that the majority of the armoured vehicle inventory of the Indian army has passed their service life whilst the Indian Air Force possesses 34 active combat aircraft squadrons against a sanctioned requirement for 42. As a result of these pressures, procurement spending is expected to rise from $10.4 billion this year to around $15 billion by 2020.
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