Budget 2022: India Furthers Indigenous Defence Capabilities
The Atmanirbhar Bharat campaign has become the bedrock of innovation in India’s ever-expanding domestic defence manufacturing sector. With measures to privatise defence manufacturing, PLI schemes in allied sectors, and support to emerging startups in the sector, India is poised to emerge as a global leader in the manufacturing of quality and cutting-edge defence equipment.
In Budget 2022-23, Finance Minister Nirmala Sitharaman extended newer incentives for the uptake of indigenous manufacturing. First, to reduce dependence on expensive imports, 68 per cent of the capital procurement budget has been earmarked for the domestic industry in 2022-23. This marks a significant increase from 58 per cent in 2021-22.
Second, the government aims to decentralise innovation in the defence sector. By earmarking 25 per cent of the defence R&D budget, the government is promoting the confluence of academia, industry and startups in research and development. Further, private players will work alongside the reputed Defence Research and Development Organisation (DRDO) of the government of India to undertake the design and development of military platforms and equipment. They will also work with other organisations under Special Purpose Vehicle (SPV) model.
The government will set up an independent nodal umbrella body to ensure that the wide-ranging testing and certification requirements will be met by innovators.
These measures are only the most recent in the government’s extensive campaign to expand Indian innovators’ footprint in the Indian armed forces. Combined with the Defence Innovation Organisation (DIO) and its execution arm Innovations for Defence Excellence (iDEX), these measures will unleash an era of Indian innovation-led procurement in India’s defence sector.