Budget 2022: Atmanirbhar Bharat in Defence! Govt announces sops for the domestic defence companies

Union Budget 2022: For FY 2022-23, the government has set aside 68 percent of the Defence Capital procurement budget for the country’s domestic industry. This is up from the 58 percent in the last fiscal. Also, a new Nodal Body has been set up for Testing and Certification requirements of the defence systems and platforms. This Nodal Body will help the domestic players in the defence sector, as the processes will be cleared faster.

Also the government has set aside 25 percent in the budget for defence research and development (R&D); start-ups and academia.  This is expected to give a further boost to the private industry.

Also read| Check latest LIVE updates on Budget 2022 here

What did the Finance Minister say about Defence Allocation in her speech?

Finance Minister Nirmala Sitharaman in her budget speech in the Parliament highlighted technologies including geospatial systems, drones, space economy, artificial intelligence (AI),  semiconductors and its ecosystem, clean mobility systems, pharmaceuticals and genomics.

In her speech, the finance minister said a large portion of the defence allocation has been set aside to procure new military equipment and weapons from the domestic industry. This is going to give further push to the government’s focus on Atmanirbhar Bharat in Defence.

She announced 68 percent of the capital procurement budget to be earmarked for the domestic industry FY 2022-23.

Will this help in the modernization of the Indian Armed Forces?

Yes. According to experts, this will encourage the Indian private companies in the defence sector to think about investing in R&D and to work with the country’s Defence Research and Development Organisation through the Special Purpose Vehicle (SPV) model.

For wide ranging testing and certification required for the military platforms and weapon systems, the minister in her speech announced the setting up of an “independent umbrella’’. This, according to her, will give a boost to collaboration with the private sector.

Reaction

The first reaction to the various announcements related to Defence in the budget speech was from the Society of Indian Defence Manufacturers (SIDM).

Welcoming the announcement of setting aside 68 percent of capital outlay of defence budget for domestic industries, President of SIDM, SP Shukla termed this to be a positive step which will help in creating jobs and investments.

According to the President of SIDM, “This will attract fresh capacity creation and sustain investments. And, the creation of a nodal body for Testing and Certification requirements of defence systems and platforms will help domestic industry through faster processes and cost-efficiency.”