Union Budget 2022 For Defence: 68% Of Capital To Be Earmarked For Domestic Industry

A new independent nodal umbrella body will be created for private players to test new technology and get certified, Sitharaman said

New Delhi: In her Budget presentation in the Lok Sabha, Union Finance Minister Nirmala Sitharaman on Tuesday announced several steps to promote atmanirbharta in the defence sector and reduce dependence on imports of defence equipment.

In her speech, the finance minister said that 68 per cent of the defence procurement budget in FY23 would be earmarked for domestic equipment, which is up 10 percentage points from FY22. She said that around 25 per cent of its budget in defence research and development (R&D) for collaborating with the private industry.

A new independent nodal umbrella body will be created for private players to test new technology and get certified, Sitharaman said.

Capital outlay for the defence sector increased to Rs 1.52 lakh crore from Rs 1.35 lakh crore last year.

The finance minister in her speech said, “Our government is committed to reducing imports and promoting Atmanirbharta in equipment for the Armed Forces. 68 per cent of the capital procurement Budget will be earmarked for domestic industry in 2022-23, up from 58 per cent in 2021-22.”

She added that the private sector will be encouraged to take up design and development of military platforms and equipment in coordination with Defence Research and Development Organisation (DRDO) and other organisations under the SPV model.

In FY22, the ministry’s capital outlay was Rs 1.35 lakh crore, a jump of around 19 per cent over FY21, with the bulk targeted at new acquisitions and military modernisation.

The revenue outlay had marginally increased to Rs 2.12 lakh crore, while the defence pensions outlay reduced year-on-year (YoY) to about Rs 1.16 lakh crore.

 “Defence R&D will be opened up for industry, start-ups, and academia with 25 per cent of defence R&D budget earmarked. Private industry will be encouraged to take up design and development of military platforms and equipment in collaboration with the DRDO and other organisations through SPV model. An independent nodal umbrella body will be set up for meeting wide ranging testing and certification requirements,” the minister added.