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How the Budget and Reforms Are Shaping Indigenous Defence Industry – PM Modi, RM Rajnath Explain

If you revisit the days of Budget announcement this year, you might have read and heard many people expressing concerns of lesser focus on the defence sector this time. Several others pointed out that in the backdrop of Chinese aggression at the border, India already spent huge amount under non-budgetary provision and therefore that analysis arguing that the defence sector is getting less is untrue.

Nevertheless, a webinar on effective implementation of Union Budget provisions in Defence sector has shed further light on the allocations and the path that India has pursued on this front.

PM Modi on Defence

Prime Minister Narendra Modi highlighted how the policy coherence with budgetary allocation is opening up new frontiers for the defence sector.

PM Modi in his deliberation touched upon the negative list of import in the defence sector being a positive list for the domestic MSME sector who are into defence manufacturing. He also elaborated on how the private sector got a huge business opportunity in defence sector through the government’s export promotion measures. Hitherto, the government was the only prominent buyer of the domestic defence manufacturing by private players, but they are getting opportunities beyond government procurement now.

Defence Minister Explains the Key Measures

The speech of Raksha Mantri (RM) Rajnath Singh addressing the webinar carried key points that explain how the allocations and policy focus in the defence sector is massively supporting the domestic defence manufacturing industry.

  • The Defence Budget has seen an unprecedented increase of 18.75% in capital outlay, over the last year, and 30% over the year before, which is the highest in the last 15 years.
  • The Ministry has planned to invest about 63% of the outlay for 2021-22 on domestic procurement, i.e. about ₹70,221 Crore for domestic defence procurement during for 2021-22.
  • Because of reforms, the FDI in India in Defence sector has jumped by more than 200%. ₹2,871 Crore worth FDI has been invested in defence sector in last 6 years.
  • Our initiatives have resulted in staggering 700% growth in defence exports in the last 6 years. India entered in the list of top 25 Exporters in the world as per data published by SIPRI in 2020.
  • To give a major boost to innovative defence technology and support Start-ups base in the country, Ministry of Defence has planned to channelize about ₹1,000 Crore during 2021-22 for procurement from iDEX Start-ups.
  • Recently, orders for 83 indigenously designed and developed LCA MK1A worth ₹48,000 Crore have been awarded to HAL. The contract for indigenously designed Light Combat Helicopter is likely to be signed soon.
  • Ministry of Defence has set a target to achieve a turnover of ₹1.75 Lakh Crore (US$ 25 Bn) defence export including export of ₹35,000 Crores (US$ 5 Bn) in Aerospace and Defence goods and services by the year 2024.
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