Union Finance Minister Nirmala Sitharaman said in her Budget speech on Tuesday that 68% of the capital procurement outlay for the armed forces will be set aside for the domestic industry in 2022-23.
Capital outlay pertains to money spent by an entity for purchasing assets such as plants, machinery and property among other things.
“Our Government is committed to reducing imports and promoting atmanirbharta [self-reliance] in equipment for the Armed Forces,” Sitharaman told the Lok Sabha.
The finance minister said that in 2021-22, 58% of the capital outlay was set aside for the domestic industry.
However, the government had in fact set aside 63% of the capital outlay for domestic industry in 2021-22, The Indian Express reported. The figure quoted by the finance minister, 58%, was originally from 2020-21, according to the newspaper.
Meanwhile, Sitharaman said that 25% of the defence research and development budget will be opened for industry, startups and academia.
“Private industry will be encouraged to take up design and development of military platforms and equipment in collaboration with DRDO [Defence Research and Development Organisation] and other organisations through SPV [special purpose vehicle] model,” the minister said. “An independent nodal umbrella body will be set up for meeting wide ranging testing and certification requirements.”
The Society of Indian Defence Manufacturing, an association representing the Indian defence industry, said that the move will sustain investment and promote the creation of production capacity, India Today reported.
“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,” SP Shukla, the president of the association said. “Allocation of 25% of Defence R&D budget for startups, academia and private industry is a much-needed reform.”
The finance ministry has allocated Rs 5.25 lakh crore for the Ministry of Defence, which amounts to 13.31% of the total budget.
Commenting on the outlay for capital procurement, Defence Minister Rajnath Singh said that the increase “reflects the government’s resolve towards sustainable enhancement in the modernisation and infrastructure development and also towards achieving the objectives of Aatmanirbhar Bharat”.
Singh added that capital allocations pertaining to modernisation and infrastructure development of the armed forces have been significantly increased to Rs 1.52 lakh crore.
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