The Indian Budget 2024-2025 demonstrates a strong commitment to bolstering the nation’s defence capabilities, fostering self-reliance, and driving economic growth through strategic investments in the aerospace and defence sectors.
Key Announcements
1. Increased Budget Allocation: The Ministry of Defence has been allocated INR 6,21,540.85 crore, constituting 13.04% of the total Union Budget and marking a 4.72% increase from the previous fiscal year. This includes a significant portion dedicated to capital acquisition (27.67% of the total defence budget), reflecting the government’s commitment to modernising and enhancing the operational capabilities of our armed forces.
2. Capital Acquisition and Modernization: The allocation of INR 1.72 lakh crore for capital acquisition underscores the focus on upgrading military hardware and infrastructure. This includes procuring new weapon systems, enhancing existing platforms, and investing in advanced technologies to improve the armed forces’ operational readiness. This is a critical area where Indian companies can contribute significantly by providing cutting-edge solutions and innovative technologies. This is a welcome increase and will continue to drive our nation’s quest to achieve “Athmanirbhar Bharat” in defence manufacturing.
3. Infrastructure Development: With INR 6,500 crore allocated for strengthening border infrastructure, the budget aims to improve the logistical and operational capabilities of the armed forces stationed at the borders. Additionally, the Indian Coast Guard’s allocation of INR 7,651.80 crore highlights the importance of maritime security and coastal defence. To keep our nation secure, this allocation to improve road networks in the northern mountainous region is of paramount importance.
4. Research and Development: The Defence Research and Development Organization (DRDO) has been allocated INR 23,855 crore to enhance its research capabilities and support the development of indigenous defence technologies. This funding is pivotal for fostering innovation and achieving self-reliance in defence production, aligning with our strategic goals to contribute to the ‘Make in India’ initiative.
5. Defence Pensions: The increased allocation of INR 1.41 lakh crore for defence pensions ensures the welfare of retired defence personnel. This commitment to the welfare of our veterans is vital for maintaining morale and supporting those who have served the nation.
6. Deep Tech Investment: The budget sets aside a corpus of INR 1.0 lakh crore for deep tech investments, providing long-term loans to youth and companies engaged in advanced technological research and development. This initiative will drive innovation and support the growth of high-tech industries in India.
Opportunities
1. Economic Growth and Job Creation: The budget’s focus on infrastructure development and capital acquisition is expected to spur economic growth and create job opportunities. Investments in defence manufacturing and technology development will not only enhance national security but also contribute to the overall economic development of the country.
2. Indigenous Production and Self-Reliance: The increased funding for DRDO and the emphasis on deep tech investments provide a significant boost to the ‘Make in India’ initiative. Promoting indigenous production of defence equipment and technologies will reduce dependency on foreign suppliers and enhance self-reliance in defence production. The Indian Aerospace and Defence Industry is dedicated to supporting these initiatives by developing and manufacturing advanced defence solutions domestically.
3. Private Sector Involvement: The budget’s infrastructure and technology development provisions will likely attract substantial private sector investments. Collaborating with private industry can accelerate innovation, improve efficiency, and bring new capabilities to the defence sector. Public-private partnerships will be crucial for leveraging the strengths of both sectors.
4. Digital Transformation: Digital transformation is a unifying theme across the aerospace and defence sectors. Leveraging digital technologies can unlock growth and efficiency, streamline operations, and improve decision-making processes. Embracing digital transformation will be vital for addressing supply chain complexities, enhancing product innovation, and improving overall industry competitiveness.
5. Global Competitiveness (GCC) : By investing in advanced technologies and infrastructure, India can strengthen its position as a global economic powerhouse and can put the foundation for a GCC in Aerospace and Defence Sector. The budget’s focus on developing new industrial parks, promoting urban-industry synergies, and enhancing transport infrastructure will support the growth of the aerospace and defence sectors and attract global investments.
One of the primary objectives for India lies in the effective implementation and utilization of the allocated defence budget. We would need to ensure that the funds are directed towards critical projects and minimizing delays will be essential for achieving the desired outcomes. The complex procurement processes and stringent regulations can often slow down the pace of project execution. Therefore, streamlining procedures and adopting more efficient project management practices are crucial for maximizing the impact of the budgetary allocations.
Further, we need to focus on areas where we can speedily achieve results in driving “Athmanirbhar Bharat” in defence sector. As a nation, we are self-sufficient today in warship building in our own shipyards. We really do not need to place orders abroad given the capability that we have developed. Today, the land system ecosystem is ready for the next transformation. We need to ensure that all the land system orders for armoured vehicles, tanks, infantry combat vehicles are placed on Indian companies and manufactured in India. This must be a thrust area for the next 5 years so that we repeat the success in warship building in land systems also.
The Indian Budget 2024-2025 presents a comprehensive roadmap for strengthening the aerospace and defence sectors. The substantial increase in budget allocation, focus on capital acquisition and modernization, investment in research and development, and emphasis on self-reliance are significant steps towards enhancing national security and economic growth. However, effective implementation, addressing workforce challenges, and ensuring supply chain resilience will be critical for realizing the full potential of these initiatives. The Indian Aerospace and Defence Industry is committed to leveraging these opportunities, overcoming the associated challenges, and playing a pivotal role in achieving India’s vision of becoming a confident, strong, and self-reliant nation
The author is Chair, FICCI Defence & Homeland Security Committee
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