On February 1, Union Finance Minister Nirmala Sitharaman said 68% of the defense procurement budget in FY23 would be allocated to domestic equipment, an increase of 10 points. percentage increase from year 22.
According to budget documents, defense sector capital expenditure increased significantly, by 13%, in year 23, from $1.35 trillion rupees to 1.52 trillion rupees in year 22, while pension income and expenditure remained stable.
In total, the budget allocation to the Ministry of Defense increased by 9% year-on-year to reach 5.25 trillion rupees in FY23 from 4.7 trillion rupees in FY22 encouraging research and development by private companies, start-ups, and universities in the research and development of defense equipment.
“Our government is committed to reducing imports and promoting Atmanirbharta in military equipment. 68% of the capital procurement budget will go to domestic industry in 202223, compared to 58% in 202122,” the minister said. of Finance Nirmala Sitharaman in his speech on the budget in Parliament on Tuesday.
“Artificial intelligence, geospatial systems and drones, semiconductors and its ecosystem, space economics, genomics and pharmaceuticals, green energy and clean mobility systems have immense potential to help development scale and modernize the country,” added the minister. , light regulation, facilitating actions to develop national capacities, and the promotion of research and development will guide the government’s approach.
The private sector can now also develop military platforms in partnership with the government’s Defense Research and Development Organization. The defense budget mainly consists of a large capital outlay, revenue expenditure (for small procurement and spare parts) and defense pensions. , the ministry’s capital expenditure was 1.35 trillion rupees, a jump of almost 19% from FY21, with most aimed at new acquisitions and military modernization. year at around Rs 1.16 trillion.
Despite only a modest increase in outlay last year, defence services had been unusually slow in spending their capital budgets this fiscal, with the army spending only about 40 percent of its allocation, while the Indian Air Force (IAF) has spent about 70 percent.
The navy spent 90 percent of its capital outlay for the fiscal. The report quoted unnamed sources as saying that Defence Minister Rajnath Singh had asked senior military officials to expedite spending of their capital budgets by the end of the financial year.
To enhance the functional autonomy and efficiency of defense-related manufacturing operations, in October 2021 the government carved out seven new defence companies out of the government department Ordnance Factory Board.
These fully owned government companies are Munitions India Ltd, Armoured Vehicles Nigam Ltd, Advanced Weapons and Equipment India Ltd, Troop Comforts Ltd, Yantra India Ltd and India Optel Ltd, and Gliders India Ltd.