Union Budget 2019 India: The expectations of the Indian Armed Forces are going to be high on Friday, when the finance minister Nirmala Sitharaman, who has been a defence minister too will be presenting the budget. Senior officials said that this so because “as a former defence minister she is aware of the challenges and requirements of the service headquarters.”
Says former Deputy Chief of Air Staff, Air Marshal Nirdosh Tyagi (retd), “Capital budget allocation should be at least 25% over the committed liabilities for the year. And remove taxes on capital acquisition till equipment deficiencies exist.”
Though tax reforms were introduced in 2017, under which all the taxes were merged barring the basic customs duty, the three services continue to pay customs duty as well GST on all defence hardware which is imported.
According to him, the old inventory is in need of urgent replacement; therefore, the allocation for the capital budget should be adequate to give momentum to modernization. “Dwindling fighter strength and old transport fleet are some examples,” Tyagi says.
Also, the private sector participation in defence manufacturing should be encouraged and they should be provided tax relief for the next 5 to 7 years, he adds.
Another former officer pointed out that the slight hike in the defence budget in the last few years has not been enough for the various modernisation programmes of the forces as the chunk of the allocation goes into paying salaries and pensions.
Over the last few years, the Indian Army has had the largest share in the defence budget, followed by the IAF and the navy, DRDO and Ordnance Factories.
Stockholm International Peace Research Institute (SIPRI) report has put India on the fourth position as the largest military spender in 2018 globally, with the United States of America, China, Saudi Arabia topping the list and France holding the fifth position.
Due to geopolitical tensions rising globally, especially between the US and Iran, conflict in the South China Sea, and India’s fight against terrorism with Pakistan make the modernisation of the armed forces more urgent.
Besides being an important strategic requirement, the capability to make the defence equipment in India is a win-win situation for the country, points out Tyagi.
In his opinion making in India will result in saving cost, employment generation and reducing the possibility of sanctions or denial by the supplier nations. However, there is an urgent requirement for structural changes in organisations including the Defence Research and Development Organisation (DRDO), Ordnance Factory Board (OFB), Directorate General Quality Assurance (DGQA).