The defence ministry had already given an in-principle approval to the increased financial powers in May last year when defence minister AK Antony had chaired a meeting of the three service chiefs along with the defence secretary. The May decision had come in the wake of reports that India's defence forces were poorly prepared. As per government rules, the defence minister has financial powers to sanction procurement of up to R500 crore for the armed forces. For procurements above R1,000 crore, the defence ministry has to seek the clearance of the Cabinet Committee on Security headed by the Prime Minister.
In recent times, financial powers of various departments under the ministry have come under the scanner of internal auditors who have raised objections to the way in which these powers have been used. After the reports came, the defence Ministry put in more checks by appointing a financial advisor in the DRDO chief's office.
India is likely to buy equipment worth $100 billion till 2022. However, the Indian defence purchases have faced a setback due to the poor economic performance of the country, resulting in the defence capital budget being pruned by over $2 billion.