Bigger allocation for Indian industry in defence modernisation funds, military R&D funds opened for private firms

In a major push to Make in India, the Centre has hiked the share of the domestic defence industry in the modernisation of armed forces with 68 per cent capital funds earmarked for procurement from local firms even as the government opened up the research and development in defence with 25 per cent funds allotted for the private sector firms.

In the Union Budget presented by Finance Minister Nirmala Sitharaman, the Defence Ministry has been allocated Rs 1.52 lakh crore this year for capital acquisition which is around 13 per cent higher than last year's allocation of 1.35 lakh crore.

Overall, the Defence Ministry has been allocated a total of Rs 5.25 lakh crore this year which is Rs 47,000 crore from the last year's 4.78 lakh crore. The allocation is around a 10 per cent increase from last year.

Presenting the Union Budget 2022-23 in the Lok Sabha the Finance Minister said 68 per cent of the capital procurement budget for Defence will be earmarked for domestic industry to promote Aatmanirbhar Bharat and reduce dependence on imports of defence equipment. This is up from 58 per cent last fiscal.

Sitharaman announced that Defence Research and Development (R&D) will be opened for industry, start-ups and academia.

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

The allocation of additional Rs 17000 crore for the modernisation of the armed forces would help in the growth of the domestic industry as the forces will have to spend 68 per cent of their funds for acquisition from local companies.

( With inputs from ANI )

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