It is heartening to see that this year budget is aligned to the government vision of ‘Viksit Bharat @2047’ and is firmly focused on making it a secure, resolute and ‘Atmanirbhar Bharat’.
In comparison to FY 2024-25, there is an increase by 9.53% in defence budget this year. The capital outlay has been increased to Rs 1,80,000 Cr as compared to Rs 1,72,000 Cr last year. In line with the aspirations to be ‘Atmanirbhar’, Rs 1,11,544.83 Cr, 75% of Capital Acquisition Budget, is earmarked for procurement through domestic sources with a sizeable portion earmarked for procurement from domestic private industries which will provide a boost to the private defence manufacturing ecosystem.
There is an emphasis on Research & Development in the budget as Rs 14,923.82 Cr is allocated for capital expenditure in R&D. The increased budget through various initiatives like Development cum Production Partner, Make, Technology Development Fund and iDEX will funnel R&D to the private companies, MSMEs and academia. The capital budget will further enthuse the defence manufacturing in India and would also help in meeting the target of increasing defence exports to Rs 50,000 Cr by 2029. The allocation for border infrastructure has also been significantly increased and is likely that this will be towards improving surveillance infrastructure at the border.
The budget for police infrastructure has also seen a significant increase. The focus of the government to ensure speedy judicial trials is visible from the substantial increase in investment in forensic infrastructure, with Rs 500 crore earmarked for Modernization of Forensic Capabilities, as compared to just Rs 150 crore last year.
Supported by the government, the Indian Defence Industry has transitioned from manufacturing components and subsystems to establishing extensive manufacturing capabilities. The land systems sector has significant growth potential within the Make in India initiative. Currently, several companies have invested in this sector to achieve self-reliance. Indian private companies are producing indigenous products, including armoured vehicles, that meet the quality, safety, and capability standards required by the armed forces. The next step should be to become indigenous for future tank and FICV programs and develop into a global manufacturing centre. This initiative, which has gained considerable momentum, is showing potential for substantial growth across various fields.
Increased private sector participation will be essential in the manufacturing aircrafts including transport aircraft. For a large nation with growing needs, we will need to three to four companies who will cater the demand of the defence forces. As a first step, to achieve this, we must establish partnerships with Global Original Equipment Manufacturers (OEMs) and integrate bridging technology with platforms that meet the current and future needs of our defence forces. The long-term objective should be to develop capabilities in this field to transform into an export hub for the world.
Overall, the Defence budget augurs well with the government vision. The increased capital investment in both the defence sector is going to have a multiplier effect in the National Economy in terms of job creation and economic growth. With year 2025 announced as ‘Year of Reforms’ for defence, industry will be closely watching the reforms with hopes of ease of business, fast paced procurement and public-private partnership.
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