India was among the top five countries with the highest military spending in 2019. While the large armies with high technological base were self-dependent, having a robust military industrial complex, Indian defence industries in the public sector domain were fund gorging slumbering behemoths.
Capital expenditure outlay for the defence sector has increased significantly by 13% in the Budgetary Allocation of FY 23.
On the contrary India has the second-largest standing army in the world and has the infamous distinction of being the largest arms importer. For a country as large as India with vast land frontiers and hostile neighbours, its defence cannot be guaranteed on importing its military weapons, munitions and equipment to the tune of 75 percent,including critical technologies.
Only answer to our strategic needs is self-reliance in matters defence. Ultimate objective being prominently labelled -‘Made in India’ and to begin with, ‘Make in India’.
President Kovind while addressing a joint sitting of both Houses of Parliament marking the start of the Budget Session 2022, highlighted steps taken in making India self-reliant in defence sector.
His speech underscored India’s focus and quest for a robust military-industrial complex in achieving the status of ‘Atmanirbhar Bharat’ (self-reliant India).
Today’s Defence Budget by the Minister of Finance Nirmala Sitharaman is likely to give a boost to ‘Make in India’ and more so the ‘Made in India’ label.
At the time when India’s presence in the global environment is more profound than ever, Nirmala Sitharaman stressed the implementation of Atmanirbhar Bharat in the arena of armed forces. In her Budget 2022 presentation, she announced a plan to boost the Defence Sector.
The government has been able to maintain reasonable stability in the Revenue and Pension expenditure. In total the Budgetary Allocation to Ministry of Defence has risen 10% year-on-year to Rs 5.25 lakh crore in FY23 from Rs 4.78 lakh crore in FY22.
A new “independent umbrella body” will be set up for private players to test new technology and certification.
Capital expenditure outlay for the defence sector has increased significantly by 13% in the Budgetary Allocation of FY 23. In the FY22, Rs 1.35 lakh crores were allocated which has been increased to Rs 1.52 lakh crores.
Key highlights of Budget 2022 in Defence Sector are as follows:
• A total of 68 % of the capital procurement budget will be earmarked for domestic industries for 2022-23. This is a marked jump of 10% from the previous year’s 58% allocation.
• It sets aside 25% of its budget in defence research and development (R&D) for collaborating with private industry.
• Finance Minister announced that 5% of Universal Service Obligation (USO) fund would be provided for R&D and technology upgradation.
• A new “independent umbrella body” will be set up for private players to test new technology and certification.
• Private industry will be encouraged to take up the design and development of military platforms and equipment in collaboration with DRDO and other organisation through Strategic Partnership model.
Society of Indian Defence Manufacturers (SIDM) has also welcomed the announcements by Finance Minister Nirmala Sitharaman.
“SIDM welcomes announcement of setting aside 68% of capital outlay of defence budget for domestic industries, up from 58% in the previous year. This will sustain investments and attract fresh capacity creation,” President of SIDM SP Shukla said adding that the positive step will lead to both investment and job creation.
Defence Minister hailed substantial amounts being allocated towards Research and Development in several sectors including Defence.
Mr Shukla also said that creation of a nodal body for setting up Testing and Certification requirements of defence systems and platforms will help domestic industry through faster processes and cost efficiency.
The defence sector has been a key area of the Modi government since it came to power at the Centre.
Last year, it had increased the capital outlay for the armed forces by nearly 19 per cent to modernise them. It also allocated Rs 1.35 lakh crore to the Defence Ministry for purchase of new weapons.
The Modi government also aims to increase the exports in the defence sector. Earlier, Defence Minister Rajnath Singh had said that India has exported defence items worth more than Rs 38,000 crore in the past seven years and the country hopes to become an overall net exporter soon.
“We have an estimated Rs 85,000 crore industry of aerospace and defence. The contribution of the private sector in this has increased to Rs 18,000 crore” Rajnath Singh added.
India’s Defence Minister, Mr Rajnath Singh further said,” It is a Budget which would give a fillip to ‘Make in India’, boost demand and build capacities for a stronger, prosperous and confident India.
“The 68 per cent of the defence capital procurement budget has been allocated towards local procurement. It is in line with the ‘Vocal for Local’ push and it will certainly boost the domestic defence industries,” Rajnath Singh further wrote.
The Budget outlines the Government’s focus on Atamnirbhar-bharat and Prime Minister Shri Narendra Modi’s vision for development and pro-people reforms. It is a growth-oriented Budget focused on harnessing the energies of New India.”
…India’s MSME sector will also get a big benefit from the decision to keep 68% of the capital procurement budget for domestic industry in 2022-23.
Defence Minister hailed substantial amounts being allocated towards Research and Development in several sectors including Defence. He hailed the proposal to reserve 25 per cent of the R&D Budget for start-ups and Private entities is an excellent move.
Congratulating Finance Minister Nirmala Sitharaman for the ‘people friendly and progressive budget’, Prime Minister Narendra Modi has said that India’s MSME sector will also get a big benefit from the decision to keep 68% of the capital procurement budget for domestic industry in 2022-23.
The PM said that this budget has brought a new confidence of development and it will strengthen the economy as well as create many new opportunities for the common man.
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In fact, its a very good budget for defence industries in India. Increasing the local content in defence aquisition to 68 percent is really remarkable. It will nurture deomestic defence industries. A new “independent umbrella body” to be set up for private players to test new technology and certification is a great initiative to facilitate private players in defence R&D and manufacturing. Alloocation 25 percent of defence R&D budget to private sector is also great initiative which I also advocated in my article in 2016 in IDR. I am happy it is reality now.