NEW DELHI: While the overall increase in defence spending is modest following inflation, the government’s push to indigenisation is clearly visible in the Union Budget. Finance Minister Nirmala Sitharaman on Tuesday announced a series of steps to speed up indigenisation during her speech in Parliament.
“Our government is committed to reducing imports and promoting Aatmanirbharta (self-reliance) in equipment for the armed forces. As much as 68% of the capital procurement budget will be earmarked for the domestic industry in 2022-23.” This is up from 63% in 2021-22.
Defence R&D will open up more for industry with startups and academia getting 25% of the defence R&D budget. Private industry will be encouraged to take up design and development of military platforms and equipment in collaboration with DRDO and other organizations through the SPV (Special Purpose Vehicle) model. An independent nodal umbrella body will be set up for meeting wide-ranging testing and certification requirements.
The Defence budget for the financial year 2022-23 is Rs 5,25,166 crore. This is an increase of Rs 46,970 crore over last year’s budget estimate of Rs 4,78,196 crore and includes the pension component. It is an increase of 9.8%. Keeping the threat perceptions along the borders, the important capital outlay is up by more than 10% for the second consecutive year.
The total defence budget minus the pensions pegged at Rs 1,19,696 crore stands at Rs 4,05,470 crore for 2022-23. The Army got Rs 32,015 crore, the Navy Rs 47, 591 cr and the IAF Rs 55,587 cr from the capital budget. The allocation under capital expenditure relates to modernisation and infrastructure development of the forces.
The Society for the Indian Defence Manufacturers has welcomed the steps announced by the Finance Minister. Similarly, Vice Admiral Paras Nath (Retd.) Group President, Crown Defence Engineering Division, said, “It is heartening to see that part of the R&D budget has been allocated to the industry, startups and academia. This will be a positive move in particular for startups and MSMEs to have their in-house R&D.”
Focus on Private players The governments plan
to go bold on indigenisation was recently highlighted by the $375 mn deal with the Philippines for sale of BrahMos. With a healthy 25% allocation to R&D, private players are expected to give further boost to native production.