In an encouraging sign for the Indian defence industry, the Government has overshot its acquisition target from them in the last fiscal ending March end. Against an earmarked 64 percent of the capital acquisition budget, 65.50 per cent was spent on indigenous procurements.
Nearly Rs 1, 35,060 crores were set aside in the last financial year for capital budget to procure weapons and other military systems. In order to give a boost to the Indian industry, 64 per cent of this capital budget was reserved for them. The revised estimate of this allocation went up to Rs 1,38,850 crores.
Besides this significant achievement, as per preliminary expenditure report of March 2022, the Defence Ministry was able to utilise 99.50 per cent of the Defence Services Budget in financial year 2021-22. The allocation under this head was Rs 3,68,418 crores.
Stepping up its objective of making India the hub of defence manufacturing on the global scene, the government set aside 68 per cent of the capital budget for financial year 2022-23. The overall capital budget is now pegged at Rs 1,52,369 crore.
Giving details of the achievement, the defence ministry said here on Wednesday 64 per cent of Capital Acquisition Budget for domestic industry was earmarked in Financial Year (FY) 2021-22.
At the end of the financial year, the defence ministry has been able to over achieve this target and has utilised 65.50 per cent of capital acquisition budget on indigenous procurements through Indian Industry to achieve Prime Minister Narendra Modi’s vision of 'Aatmanirbhar Bharat,' it said.
Stepping up its effort to promote Indian private sector in defence manufacturing, the government recently earmarked 25 per cent to it of the Rs. 84,597.89 crore allocated specifically for the entire domestic industry for the current financial year.
The 25 per cent block for the private sector amounts to more than Rs 21,000 crores and forms part of the overall 68 percent capital budget earmarked for the Indian industry.
Giving the details, defence ministry officials said here in continuation with the government’s efforts to promote private industry, MSMEs and start-ups in defence production ecosystem, the defence ministry decided that 25% of Domestic Capital Procurement and Acquisition Budget, amounting to Rs. 21,149.47 Crore, will be earmarked for Domestic Private Industry in the Financial Year 2022-23.
Further, to foster innovation and encourage technology development in defence, it was decided that an amount of Rs. 1,500 Crore will be earmarked for procurement from start-ups, including iDEX Start-up, from within the allocations for Domestic Capital Procurement. These steps will foster the growth of private industry, MSMEs and start-ups in Defence ecosystem.
Earlier, the government had decided to earmark 68% of Capital procurement budget for the entire domestic industry during Financial Year 2022-23. Accordingly, an amount of Rs. 84,597.89 Crore was allocated specifically for domestic defence industry in current fiscal year, they said.
In the last few years, the government has taken a series of measures to boost domestic defence manufacturing. In May 2020, the government announced increasing the Foreign Direct Investment(FDI) limit from 49 per cent to 74 per cent under the automatic route in the defence sector.India is one of the largest importers of arms globally.
According to estimates, the Indian armed forces are projected to spend around USD 130 billion (in capital procurement in the next five years.
The government now wants to reduce dependence on imported military platforms and has decided to support domestic defence manufacturing.