India has set aside $70 billion for the fiscal year 2022-23 as part of its defence budget, an increase of about 10% above the amount set up in the previous budget. While the defence budget, excluding military pensions, is expected to equal $49.6 billion, up more than 3% from the previous year’s figure of $47.98 billion. It sets up $18.48 billion for weapons purchase, a 16 percent increase over the previous year’s $15.91 billion. While, $29.02 billion has been set for maintenance of existing weapons, pay and allowances.
The Indian government has also earmarked 68% of its procurement budget for buying from domestic players. It’s also set aside 25% of its budget in defence research and development (R&D) for collaborating with the private industry. A new “independent, umbrella” body will be set up for private players to test new technology and get certified.
GDI spoke to Air Vice-Marshal Pranay Sinha (Retd), who told GDI’s correspondent that, “on face value, it [68% defence budget allocation to Indian firms] will give impetus to the home industry. Long term impact – needs detailed study.”
Similarly, Lieutenant General PC Katoch (Retd) offered his take on Indian defense budget: “Releasing list after list of negative import lists are useless unless the production capacity of individual item meets the requirements of the military in the required time frame. Similarly, privatisation is no doubt the key but it has to be an open field, not through Defence Private Sector Undertakings (DPSUs) and favored private firms who fund elections.
Major General Rana Goswami (Retd) told GDI: “Everything depends on the level of technology involved and its availability within the country. If you lay down limits, you may land up with no purchases because of non-availability or provide substandard products, which will let us down in war, as it has happened in the past.”
“We should select the best, wherever it is available. If ex-import, sign a TOT contract, so that a certain percentage is bought off the shelf for immediate needs and the remaining is made through technology transfer, within our country,” Maj Gen Goswami explained.
“Never go for substandard products, as it is our country’s security which is at stake. A loss in war or a battle will haunt you for years as 1962 does, and you can curse the guys who got you substandard stuff. It won’t help. Decisions based on vote bank politics is always bad in the long run,” the Indian General concluded.
Mr. SP Shukla, President, Society of Indian Defence Manufacturers (SIDM) remarked that “SIDM welcomes announcement of setting aside 68% of capital outlay of defence budget for domestic industries. This will sustain investments and attract fresh capacity creation.”
“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, Mr. Shukla hoped.
Allocation of 25% of Defence R&D budget for Startups, Academia and Private Industry is a much-needed reform. He also thanked Indian Ministry of Defence and Ministry of Finance for this major boost to Research and Innovation.
Rear Admiral Vineet Bakshi (Retd) said “Fundamental to the budget is the process for acquisition. This has been evolving continuously, such that there is no clarity or stability. A policy today is in the bin tomorrow. It would be prudent to have a system of procurement which would assure the suppliers of some stability of methods and assurance of continuity of orders. In so far as a maritime perspective is concerned, the need for the IN and ICG is limited, barely 8-10 ships per year and one submarine per year. It would be worthwhile to build specialized capabilities in select yards to encourage highly specialized construction techniques, which take many years to develop.
Further, having built facilities, care also be taken to nurture them. GSL has built capabilities of making specialized Fiber glass Minesweepers, was given an order, but cancelled for some reasons. The Yard is now devoid of orders whilst the Navy has practically decommissioned most of its own MCMVs! Making in India is good policy, we need the technology to back it.
The Army will get $4.9 billion in capital expenditures, the Navy $4.55 billion, and the Air Force $7.2 billion. The state-owned Defence Research and Development Organisation will get around $1.55 billion in capital expenditures for new projects. A revenue expenditure of $1.24 billion has also been allocated to the DRDO.
About the Author:
Aritra Banerjee is the India Correspondent at Global Defense Insight, a journalist at Indian Aerospace & Defence Magazine, and Contributing Editor at Frontier India. He has worked extensively as a defence reporter in print and online media with stints at Fauji India and EurAsian Times