New Delhi: In a major fillip to the defence sector, Finance Minister Nirmala Sitharaman Tuesday increased the capital outlay for procurement of new equipment by the Army, Navy and Air Force to Rs 1.52 lakh crore, from the revised estimates of Rs 1.38 lakh crore for the current fiscal.
The overall defence budget, including pensions, stood at Rs 5.25 lakh crore, up from Rs 4.78 lakh crore in the 2021-22 financial year. The new defence budget is 13.3 per cent of the total expenditure planned by the Narendra Modi government for the financial year 2022-23. It is also about 2.03 per cent of India’s nominal GDP (pegged at Rs 258 lakh crore) for the 2022-23 fiscal.
Presenting the Union Budget in Parliament, Sitharaman also made a massive push for domestic defence equipment manufacturers, by earmarking 68 per cent of the capital budget for them, while reserving 25 per cent of research and development funds for private companies, start-ups and academia.
“Our government is committed to reducing imports and promoting ‘atmanirbharta‘ (self-reliance) in equipment for the armed forces. Sixty-eight per cent of the capital procurement budget will be earmarked for domestic industry in 2022-23, up from 58 per cent in 2021-22,” she said.
This figure of 58 per cent had been the target in 2020-21, while in the Budget for the 2021-22 financial year, 63 per cent of the capital budget was reserved for the domestic industry. According to officials, the ministry was, in fact, able to achieve 64 per cent.
The finance minister said defence research and development (R&D) will be opened up for industry, start-ups and academia, with 25 per cent of defence R&D budget earmarked for them.
“Private industry will be encouraged to take up design and development of military platforms and equipment in collaboration with DRDO and other organisations through SPV (Special Purpose Vehicle) model,” she said.
In another pro-industry step, Sitharaman also announced the creation of an independent nodal umbrella body for meeting wide-ranging testing and certification requirements.
Armed forces, manufacturing industry welcome budget
Defence Minister Rajnath Singh welcomed the Budget, saying “it is in line with the ‘Vocal for Local’ push and it will certainly boost the domestic defence industries”.
The armed forces too welcomed the increased capital outlay and pointed out that contrary to the budgetary estimates for last year, which stood at Rs 1.35 lakh crore, the forces had got an additional Rs 3,000 crore to meet their expenses, largely driven by the Navy.
The Indian defence manufacturing industry also expressed its satisfaction. In a statement, president of the Society of Indian Defence Manufacturers (SIDM), S.P. Shukla, said the Budget will sustain investments and attract fresh capacity creation.
(Edited by Poulomi Banerjee)
Source: The Print