Budget 2022: 68% of Defence Capital Procurement Budget to be Earmarked for Domestic Industry

New Delhi: With an aim to reduce imports and promote AtmaNirbharta in equipment for the Armed Forces, the Indian government will earmark 68% of the defence capital procurement budget for domestic industry, Finance Minister Nirmala Sitharaman said on Tuesday (February 1).

She made this announcement in the Lok Sabha while presenting the Union Budget 2022-23.

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“Our Government is committed to reducing imports and promoting AtmaNirbharta in equipment for the Armed Forces. 68 per cent of the capital procurement budget will be earmarked for domestic industry in 2022-23, up from 58 per cent in 2021-22,” Sitharaman said.

“Defence R&D will be opened up for industry, startups and academia with 25 per cent of defence R&D budget earmarked. Private industry will be encouraged to take up design and development of military platforms and equipment in collaboration with DRDO and other organisations through SPV model. An independent nodal umbrella body will be set up for meeting wide ranging testing and certification requirements,” the Finance Minister added.

Defence Minister Rajnath Singh, on Twitter, said the budget has given “further impetus” to modernisation of Defence Services and Defence Security Infrastructure Development.

“The Union Budget for Financial Year 2022-23, presented by the Finance Minister today, has given further impetus to modernisation of Defence Services and Defence Security Infrastructure development, including the Border Road Infrastructure and Coastal Security Infrastructure,” he wrote.

He said, that the total Defence Budget represents an enhancement of Rs 46,970 crore (9.82%) over Budget Estimates 2021-22.

“The Union Budget 2022-23 envisages a total outlay of Rs 39.45 lakh crore. Out of this, Ministry of Defence has been allocated a total budget of Rs 5.25 lakh crore, which is 13.31% of the total budget. This includes an amount of Rs 1.19 lakh crore for Defence Pensions. Further, during this period, the total Defence Budget including Defence Pensions has increased by 107.29%, from Rs 2.53 lakh crore in 2013-14 to Rs 5.25 lakh crore in 2022-23,” Rajnath said.

He continued, “The total allocation under Capital Outlay of the Defence Services has been increased from Rs 86,740 crore in 2013-14 to 1.52 lakh crore in 2022-23. This is an enhancement of 76% over a period of nine years. This represents an increase of Rs 17,308 crore (12.82%) over FY 2021-22. Further, cumulative increase in the Capital Budget since 2019-20 has been Rs 48,975 crore (47.37%).

“Sustained thrust on Modernisation & Infrastructure Development: In the Union Budget 2022-23, the Capital Allocations pertaining to modernisation and infrastructure development of Armed Forces has been significantly increased to Rs 1.52 lakh crore. The increase in the overall Capital Budget reflects the Government’s resolve towards sustainable enhancement in the modernisation and infrastructure development and also towards achieving the objectives of ‘Aatmanirbhar Bharat’.

“The share of domestic capital procurement, which was earmarked at 64% in 2021-22, has been enhanced to 68% of the Capital Acquisition Budget of the Defence Services (Rs 1,24,000 crore) for the FY 2022-23, which would be Rs 84,598 crore. In absolute terms, this amount is Rs 8,050 crore in FY 2022-23 against Rs 5,173 crore in FY 2021-22.

“The Capital segment of the MoD (Civil) budget catering to organisations such as Indian Coast Guard (ICG), Border Roads Organisation (BRO) and Directorate General Defence Estates (DGDE) etc has also seen a notable jump of 55.60%.”

On the capital budget of Border Roads Organisation (BRO), the Defence Minister said, “The Capital Budget of BRO has been increased by 40% to Rs 3,500 crore in FY 2022-23 vis-à-vis Rs 2,500 crore in FY 2021-22. This will expedite the progress of creation of border infrastructure including important tunnels (Sela &Naechiphu tunnel) and bridges on major river gaps.”

He added, “This increase is aimed at acquisition of new platforms, creation of Op and Strategic Infrastructure, bridging of critical capability gaps and building a credible maritime force for the future. Underlining the importance of overall maritime security, the Capital Budget of the Indian Navy has been enhanced by 44.53%, with a total allocation of Rs 46,323 crore in FY 2022-23.

“This enhancement is aimed at building up of assets such as acquisition of ships & aircraft, augmentation of infrastructure, establishment of coastal security network and building up technical & administrative support structures. Additionally, to boost the Coastal Security, the Capital budget of Indian Coast Guard has been enhanced by 60.24% to Rs 4,246 crore in FY 2022-23 vis-à-vis Rs 2,650 crore in FY 2021-22.”

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