68% of Capital Acquisition Budget for Defence set For Local Purchase

68% of Capital Acquisition Budget for Defence set For Local Purchase

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68% of Capital Acquisition Budget for Defence set For Local Purchase

Shri Rajnath Singh, Raksha Mantri, congratulated Smt Nirmala Sitharaman, Finance Minister, for presenting an excellent budget. “It is a Budget which would give fillip to Make in India, boost demand and build capacities for a stronger, prosperous and confident India,” he Twitter. The Government has thus underlined its commitment to promote self-reliance in the defence sector.

The overall defence budget has gone up by 9.8% compared to last year’s allocation. India had set aside ₹4.78 lakh crore for military spending in its budget for 2021-22, compared to ₹4.71 lakh crore a year before. This accounts for 2.03% of the country’s projected gross domestic product (GDP) for 2022-23. It includes a revenue expenditure of ₹2.3 lakh crore and a pension outlay of ₹1.19 lakh crore. The share of the defence budget thus stands at 13.3% of the total government expenditure.

The budget for 2022-23, earmarked ₹84,598 crore — 68 % of the military’s capital acquisition budget — for purchasing locally produced weapons and systems to boost self-reliance in the defence sector. Also 25% of the defence R&D budget has been set aside for private industry, start-ups and academia to encourage them to pursue design and development of military platforms.

Defence was allocated ₹5.25 lakh crore for military spending in this year’s budget, including a total capital budget of ₹1.52 lakh crore for the modernisation of the armed forces. This year’s capital outlay is 12.8% higher than the budget estimates for 2021-22 when it was ₹1.35 lakh crore.

The capital budget of the navy and coast guard has also gone up most significantly, reflecting the government’s focus on maritime security — their capital outlays have gone up by 44.5% and 60.2%, respectively, the statement said.

The amount set aside for domestic defence procurement this year is 68% of the defence services capital acquisition budget, which is ₹1.24 lakh crore, the defence ministry said in a statement.

Revised estimates in the budget documents show that the armed forces spent over ₹21,000 crore on top of last year’s budget allocation, amid the lingering border row with China that saw India make a raft of emergency purchases and sharpen its focus on building infrastructure in forward areas. Last year, the armed forces spent ₹20,776 crore on the emergency purchase of weapons and systems to beef up their capabilities to deal with new security challenges along the country’s borders.

Private industry will be encouraged to take up design and development of military platforms and equipment in collaboration with the Defence Research and Development Organisation (DRDO) and other organisations through the SPV (special purpose vehicle) model, she said.

The minister added that an independent nodal umbrella body will also be set up to meet wide-ranging testing and certification requirements of different systems.

The industry has welcomed the government’s announcements. The capital outlay for domestic industries will sustain investments and attract fresh capacity creation, said Society of Indian Defence Manufacturers (SIDM) president SP Shukla.

“Allocation of 25% of defence R&D budget for start-ups, academia and private industry is a much-needed reform,” he added.

India has set aside ₹70,221 crore — 64% of the military’s capital budget — for domestic defence procurement last year, as compared to ₹51,000 crore, or 58% of the capital budget, in 2020-21.

The allocation for indigenous procurement, made for the third consecutive year, will power the purchase of Tejas LCA (light combat aircraft) Mk-1A jets, light combat helicopters (LCHs), basic trainer aircraft, Arjun Mk-1A tanks, a variety of missiles and other weapons, officials said.

The capital budget of the Border Roads Organisation (BRO) has been increased from ₹2,500 crore last year to ₹3,500 crore this year, a healthy jump of 40%.