Budget 2022: Reduce dependence on imports of defence equipment, says FM

To make India self-reliant in the defence sector, the government has given impetus to the defence sector. While delivering the Union Budget 2022-23 speech, Finance Minister Nirmala Sitharaman said “Our Government is committed to reducing imports and promoting AtmaNirbharta in equipment for the Armed Forces.” India will earmark 68 per cent of its capital procurement budget of the defence sector for the domestic industry.  This is 10% up from last year’s budget, which was 58 per cent in 2021-22.

Defence Budget increased 10 per cent to Rs 5.25 lakh crore versus 1.45 per cent increase last year. Capex allocation is also been increased by 13% to Rs 1.52 lakh crore. With 68 per cent capex budget for domestic procurement vs 58 per cent last year, the Govt reiterates its commitment towards in-country manufacturing,” says Gaurav Mehndiratta, Partner and Head –Aerospace & Defence, KPMG India.

“Through this Budget, the government has reiterated the significance of indigenized defence manufacturing by enhancing procurement budget allocation to the domestic industry. This is an important policy alignment with the Atmanirbhar goal in military procurements,” says Sumit Singhania, Partner, Deloitte India.

In addition, defence R&D will be opened up for industry, startups and academia with 25 per cent of defence R&D budget earmarked, said Minister Sitaraman. Private industry will be encouraged to take up design and development of military platforms and equipment in collaboration with DRDO and other organizations through SPV model.

“The proposal permitting private participation in Defence R&D and design & Development of military equipment and platforms will enable ushering in best-in-class technology with competitive pricing. One would need to be look at key conditions to be rolled out for this public-private participation to kick off without inordinate delay," added Singhania.

An independent nodal umbrella body will be set up for meeting wide ranging testing and certification requirements.