India ramps up defence budget to Rs 5.25 lakh crore; 25 per cent meant for R&D

By Anish Kumar | First Published Feb 1, 2022, 2:14 PM IST

From the allocated budget, the budget for capital outlay earmarked is at over Rs 1.52 lakh crore, revenue outlay at 2.33 lakh crore, and defence pension at around Rs 1.20 lakh crore.

Aiming to further take up the modernisation drive of Indian armed forces, the government has allocated over Rs 5.25 lakh crore for the defence ministry this year, which is a significant increase from the previous year's budget of Rs 4.78 lakh crore.

From the allocated budget, the budget for capital outlay earmarked is at over Rs 1.52 lakh crore, revenue outlay at 2.33 lakh crore, and defence pension at around Rs 1.20 lakh crore.

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In an effort to realise the government's ambitious self-reliance campaign and reduce dependency on imports of defence items from foreign countries, Finance Minister Nirmala Sitharaman on Tuesday announced that 25 per cent of the defence budget was meant for research and development would be reserved for the private entities and startups.

While presenting her fourth consecutive Budget in Parliament on Tuesday, Sitharaman said that the defence R&D will be opened for industry, startups and academia with 25 per cent of the R&D budget earmarked.

She further also mentioned that "Our government is committed to reducing imports and promoting Aatmanirbhar Bharata in equipment for the armed forces. 68 of the capital procurement budget will be earmarked for the domestic industry in 2022-23 up from 58 per cent in 2021-22."

However, the figure 58 per cent was earmarked for 2020-21 and 63 per cent was in 2021-22.

"An independent nodal umbrella body will be created to meet wide-ranging testing and certification requirements," she added.

The private defence equipment manufacturers have appreciated the government’s move.

Welcoming the announcement of setting aside 68 per cent of capital outlay of defence budget for domestic industries, SIDM president SP Shukla said that this will sustain investments and attract fresh capacity creation.

"The domestic industry will be will receive major help due to the setting up of a nodal body for establishing testing and certification requirements of defence systems and platforms. This would make the process faster and cost-efficient," he added.

Allocation of 25 per cent of Defence R&D budget for Startups, Academia and Private Industry is a much-needed reform. "We thank Ministry of Defence and Ministry of Finance for this major boost to Research and Innovation," SIDM president stated.

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