75% of capital budget for domestic industry, says Rajnath Singh

Earlier this month, the Defence Ministry was allocated a budget of Rs 5.94 lakh cr, of which the ministry would spend Rs 1.63 lakh cr on modernisation

Defence Minister Rajnath Singh on Wednesday announced reserving 75 per cent of the defence ministry’s capital procurement budget exclusively for the domestic industry in 2023-24, opening up a Rs 1.22 lakh crore business opportunity for Indian companies to supply arms, ammunition, sensors, electronics and other systems to the armed forces.

Earlier this month, the Defence Ministry was allocated a budget of Rs 5.94 lakh crore, of which the ministry would spend Rs 1.63 lakh crore on modernisation. Three-fourth of the budget, around Rs 1.22 lakh crore, would exclusively be spent on domestic purchase.

“If you take one step, the government promises to take ten steps forward. You spoke of land to run on the path of development, we are providing you full sky. Earmarking three-fourth of the capital procurement budget for the local industry is a step in that direction,” Singh said at a B2B event, named Bandhan, at Aero India here.

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This would mean the availability of an additional Rs 19,000 crore for purchase from the growing Indian defence industry as compared with last year’s budget when 68 per cent of the ministry’s capital acquisition fund of Rs 1.52 lakh crore was reserved for the domestic sector.

According to government data, India has nearly 200 defence start-ups building innovative tech solutions in addition to known players and state-owned firms. The government has set a target of Rs 1.75 lakh crore of defence production by 2025, which includes the export of Rs 35,000 crore.

The Union government has so far come out with four positive indigenisation lists giving details of more than 400 items that the armed forces are to procure only from domestic sources. Singh has not ruled out a fifth such list in the future.

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The Bandhan ceremony witnesses forging of 266 B2B partnerships, worth around Rs 80,000 crore and release of new weapons and sensors by the defence public sector units.

One of the key agreements was inked between HAL and French major Safran for the joint development of the engine intended for the future 13-ton IMRH (Indian Multi-Role Helicopter) and its naval version DBMRH (Deck Based Multi-Role Helicopter).

Other memorandum of understanding concluded during the deal include a pact between Indian Army and US-based BSS Material Limited and Pegasus Engineering for logistic drones for the Indian Army towards last-mile Delivery for forward troops deployed along the border areas and an agreement between Indian Navy and Sagar Defence Engineering Private Limited and Israel Aerospace Industries for “Autonomous Weaponized boat Swarm.”