This increase is due to a number of factors, including the Make in India initiative, which has encouraged the development of a domestic defence manufacturing industry. The government has also been providing financial incentives to defence exporters, and has been working to improve the ease of doing business in the defence sector.

Promotion of Defence Exports

The government has taken a number of steps to promote defence exports in recent years. These include:

• Streamlining export procedures: Export procedures have been simplified to make it easier for companies to export defence equipment and technologies. This includes reducing the number of approvals required, and making it easier to obtain export licenses.

• Providing financial incentives: A number of financial incentives have been introduced to encourage defence exports. These include the Scheme for Promotion of Defence Exports (SPDE), which provides financial support for attending international defence exhibitions, marketing, and publicity of Indian defence products abroad.

• Encouraging partnerships with overseas firms: Indian defence companies have been encouraged to form partnerships with overseas firms. This can help Indian companies to access new markets, and to gain access to foreign technology and expertise.

• Promoting India’s defence manufacturing capabilities: The Make in India initiative has promoted India’s defence manufacturing capabilities by attracting foreign investment in the defence sector, and encouraged the development of a domestic defence manufacturing industry.

The government is also working to improve the ease of doing business in the defence sector. This includes simplifying the regulatory environment, and providing better infrastructure and support services to defence companies. The government is also working to promote India’s defence exports to countries in the Indian Ocean Region (IOR).

Streamlining Export Procedures

A number of steps have been taken to streamline export procedures for defence equipment. These include:

•  Establishing a single-window clearance mechanism: A single-window clearance mechanism has been established for defence exports. This means that all approvals required for export of defence equipment can be obtained from a single agency, the Department of Defence Production (DDP).

• Introducing an online export tracking system: An online export tracking system has been introduced for exporters to track the progress of their export applications, and to get updates on the status of their applications.

•  Simplifying the export documentation: The export documentation required for defence exports has been simplified to reduce the time and cost involved in obtaining export licenses.

• Providing online training on export procedures: The government provides online training on export procedures to defence exporters to help exporters understand the export procedures, and to comply with the export regulations.

Financial Incentives

A number of financial incentives have been introduced to encourage defence exports. These include:

• The Scheme for Promotion of Defence Exports (SPDE): The SPDE provides financial support for attending international defence exhibitions, marketing, and publicity of Indian defence products abroad. The scheme also provides financial assistance for the development of new defence products, and for the testing and certification of defence products.

• The Defence Export Promotion Capital Goods (DEPCG) Scheme: The DEPCG Scheme provides financial assistance for the purchase of capital goods by defence exporters. This can help exporters to upgrade their production facilities, and to improve the quality of their products.

• The Defence Export Promotion Rebate (DEPR) Scheme: The DEPR Scheme provides a rebate on customs duty for imported components used in the manufacture of defence exports. This can help to reduce the cost of production for defence exporters.

The SPDE is the main financial incentive for defence exports administered by the Department of Defence Production (DDP). It is a centrally-sponsored scheme, which means that the central government provides the funding.

The SPDE provides financial support for a variety of activities related to defence exports. These activities include:

• Attending international defence exhibitions

• Marketing and publicity of Indian defence products abroad

• Development of new defence products

• Testing and certification of defence products

The SPDE is a competitive scheme. Exporters must submit a proposal to the DDP, and the proposals are evaluated on a number of factors, including the commercial viability of the project, the export potential of the product, and the benefits to the Indian economy.

In addition to the SPDE, there are a number of other financial incentives available to defence exporters. These incentives are available from the central government, as well as from state governments and from financial institutions.

Defence Manufacturing

A number of steps have been taken by the government to promote India’s defence manufacturing capabilities. These include:

• The Make in India initiative: The Make in India initiative was launched in 2014 to attract foreign investment and to encourage the development of a domestic manufacturing industry. The initiative has been successful in attracting foreign investment in the defence sector, and has helped to boost the growth of the Indian defence manufacturing industry.

• The Defence Production Policy 2020: The Defence Production Policy 2020 was released in 2020. The policy aims to promote self-reliance in defence manufacturing, and to increase the share of domestic production in the Indian defence market. The policy includes a number of measures to promote defence manufacturing, such as increasing the FDI limit in the defence sector, and providing financial incentives to defence manufacturers.

• The Strategic Partnership (SP) Model: The SP Model was introduced in 2017. The model allows Indian companies to partner with foreign Original Equipment Manufacturers (OEMs) to develop and manufacture defence products in India. The SP Model has helped to attract foreign investment in the Indian defence sector, and has helped to boost the growth of the Indian defence manufacturing industry.

• The Defence Innovation and Research (DIR) Fund: The DIR Fund was launched in 2018 to promote innovation and research in the defence sector. The fund provides financial support to start-ups and small businesses that are developing new defence technologies.

Defence R&D by Private Sector

A number of steps have been taken to enhance defence research & development (R&D) by Indian private sector companies. These steps include:

• The Defence Research and Development Policy 2018: The Policy was aims to promote private sector participation in defence R&D. It includes a number of measures to promote private sector participation, such as providing financial incentives, and setting up defence R&D parks.

• The Innovations for Defence Excellence (iDEX) scheme: Launched in 2016, the iDEX scheme is designed to promote innovation and R&D in the defence sector. The scheme provides financial support to start-ups and small businesses that are developing new defence technologies.

• The Defence Technology Development Fund (TDF): The TDF was launched in 2016 to promote defence R&D by Indian companies. The fund provides financial support to companies that are developing new defence technologies.

• The Defence Innovation and Research (DIR) Fund: The DIR Fund was launched in 2018 to promote innovation and research in the defence sector. The fund provides financial support to start-ups and small businesses that are developing new defence technologies.

Some of the specific incentives and schemes that are available to Indian private sector companies for defence R&D are:

• Financial incentives: The government provides financial incentives in the form of grants, loans, or tax breaks to companies that are involved in defence R&D. These incentives can take the.

• Access to government facilities: The government provides access to its facilities like laboratories, test ranges, and other infrastructure to companies that are involved in defence R&D.

• Collaboration with government agencies: The government collaborates with companies that are involved in defence R&D. This collaboration can take the form of joint research projects, or the sharing of information.

• Access to foreign technology: The government provides access to foreign technology to companies that are involved in defence R&D. This can help companies to develop new technologies that are not available in India.

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The increase in defence exports is also a reflection of India’s growing military power. India is now one of the world’s largest arms importers, and is increasingly looking to develop its own defence capabilities. This has led to an increased demand for Indian-made defence equipment, both from the Indian military and from foreign buyers.

The growth of India’s defence exports is  helping to boost the economy, create jobs, and enhance India’s global standing. It is also helping to reduce India’s dependence on foreign arms imports.

The steps taken to boost exports have helped to streamline export procedures for defence equipment, and have made it easier for companies to export defence equipment from India.

The government is also working to improve the infrastructure and support services available to defence manufacturers. This includes providing better training and education facilities, and improving the availability of raw materials and components. The government is also working to promote defence exports, and to create a more favourable environment for defence manufacturing in India.

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Based on data presented in parliament and published through the Press Information Bureau India’s defence exports record is as follows:

Year       Rs in crores

2013-14                686

2014-15                794

2015-16                1,056

2016-17                1,521

2017-18                4,682

2018-19                10,746

2019-20                9,116

2020-21                8,435

2021-22                12,815

2022-23               15,918 (est)

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The defence ministry signed three contracts worth ₹19,600 crore with domestic shipyards for 11 next-generation offshore patrol vessels and six next-generation missile vessels, and another one worth ₹1,700 crore with Bharat Electronics Limited (BEL) for a fire control system to boost the navy’s capabilities.

It also signed a ₹8,160-crore contract with Bharat Dynamics Limited (BDL) for improved Akash surface-to-air missiles for the army, and another one worth ₹990 crore with BEL for Swathi weapon locating radars, also for the army.

The sixth contract of the day was signed with BrahMos Aerospace for next-generation maritime mobile coastal batteries (long range) and BrahMos missiles for ₹1,700 crore.

The offshore patrol vessels are being bought from Goa Shipyard Ltd (GSL) and Garden Reach Shipbuilders and Engineers (GRSE), Kolkata, for ₹9,781 crore, while the missile vessels will be supplied by Cochin Shipyard Limited (CSL) for ₹9,805 crore.

The latest deals come a day after the ministry signed three contracts worth ₹5,400 crore for an advanced communication satellite, GSAT 7B, for the army, an automated air defence control and reporting system for the army’s air defence units, and Sarang electronic support measure systems for navy helicopters.

The ministry has signed contracts worth almost ₹52,000 crore (including the deals signed on Thursday) in the last four weeks for indigenous military hardware, including basic trainer aircraft, cadet training ships, medium-power radars, radar warning receivers and Dornier aircraft.

“Of the 11 offshore patrol vessels, seven will be indigenously designed, developed and manufactured by GSL and four by GRSE. The delivery of the ships is scheduled to commence from September 2026…and the missile vessels from March 2027,” the ministry said in a statement.

It elaborated on the capabilities the platforms ships will bring to the navy.

The offshore patrol vessels will enable the navy to maintain its combat capability and meet various operational requirements including anti-piracy, counter-infiltration, anti-poaching, anti-trafficking, non-combatant evacuation operations, and search and rescue.

The construction of these ships will generate an employment of 110 lakh man-days over seven-and-a-half years, the ministry said.

The heavily-armed missile vessels will come with stealth, high speed and offensive capability, and their primary role will be to provide offensive capability against enemy warships and land targets.

“These ships will be capable of conducting maritime strike operations, anti-surface warfare operations and would be a potent instrument of sea denial for enemy ships especially at choke points,” the ministry said. The construction of these ships will generate an employment of 45 lakh man-days over nine years.

The contract with BDL for improved Akash weapon system (AWS) is for the army’s Army Air Defence’s third and fourth regiments. “In order to meet aerial threats, two additional regiments of AWS with upgradation are being procured for Indian Army for the northern borders (with China),” the ministry said in another statement.

“The project will give a boost to the Indian missile manufacturing industry in particular and the indigenous defence manufacturing ecosystem as a whole. It has an overall indigenous content of 82% which will be increased to 93% by 2026-27.”

On the weapon locating radars, the ministry said the system is capable of locating hostile guns, mortars and rockets, and facilitating their destruction through counter bombardment. “This will enable troops to carry out their operational tasks without any interference from the enemy and also provide them safety against enemy fire. Induction is planned to be completed in 24 months.”

The Lynx-U2 system fire control system ordered for the navy is capable of accurately tracking and engaging targets amid sea clutter as well as air/surface targets, the ministry said in a separate statement.

It will be installed on offshore patrol vessels to be built at GRSE, and GSL. This latest order for BEL will generate an employment of 200,000 man-days over the next four years, the statement added.

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The minister also said the value of defence exports in 2021-22 was Rs 12,815 crore while it was Rs 13,398 crore till March 6 in the current fiscal.

To a separate question, he said the modernisation of armed forces to meet future challenges is a continuous process based on the long-term integrated planning process.

“The annual acquisition plan is formulated annually based on inputs from the services and is based on identified threats and inter-service prioritisation and emerging technologies,” Bhatt said.

The minister said there has been a consistent increase in the share of the capital acquisition budget.

“An amount of Rs 1,24,408.66 crore has been earmarked for capital acquisitions in the financial year 2022-23, which has been increased to Rs 1,32,727 crore for the year 2023-24,” Bhatt said.

“Further, the DRDO has undertaken 50 mission mode and technology development projects worth Rs 23,722 crore in the last three years for development of indigenous weapons and technologies,” he said.

Replying to another query, Bhatt said the Indian Navy has opened all branches to women at graduate level entries. The branches are executive, engineering, electrical and education.

The number of women who have applied for recruitment under the executive branch is 3,941, the number for engineering wing is 360, electrical is 652 and 411 have applied for education wing.

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The new Make in India in defence as part of Atmanirbhar (self-reliant) Bharat policy is particularly strong on design. In fact, because of the indigenous technology development efforts, more than 2500 number of patent applications have been filed during the last four years in comparison to 1700 number of cumulative applications filed from inception till then.

Such efforts are likely to have huge impact on development of defence platforms to meet the growing and futuristic requirement of our Armed Forces, the source added. Not only has there been a push towards innovation with tie ups with Indian Institute of Technologies (IITs) and other academic institutions, provisions have also been made in the budgetary allocation towards research and development.

Beginning with the financial year 2022-23 the Defence R&D has been opened up for industry, startups 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 DRDO and other organisations through SPV (Special Purpose Vehicle) model. An independent nodal umbrella body will be set up for meeting wide ranging testing and certification requirements.

The new Make in India in defence as part of Atmanirbhar (self-reliant) Bharat policy is particularly strong on design. In fact, because of the indigenous technology development efforts, more than 2500 number of patent applications have been filed during the last four years in comparison to 1700 number of cumulative applications filed from inception till then.

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Defence minister Rajnath Singh approved the latest list to cut down imports by defence public sector undertakings and achieve Aatmanirbharta (self-reliance) in the defence manufacturing sector, the ministry said in a statement.

This is the third list of “important line replacement units (LRUs)/sub-systems/ components” placed under an import ban. It comes on the back of two similar lists published by the government in December 2021 and March 2022.

“These lists contain 2,500 items which are already indigenised and 458 items which will be indigenised within the given timelines. Out of 458, 167 items have been indigenised so far,” the defence ministry said.

The indigenous development of these sub-systems and components will bolster the economy, reduce the import dependence of DPSUs, help harness design capabilities of the domestic defence industry and position India as a leader in these technologies, it added.

The components and sub-systems sought to be produced locally include several items for Sukhoi-30 and Jaguar fighters, light combat aircraft and Dornier-228 planes; multiple systems for submarines, and equipment for T-90 and Arjun tanks.

To be sure, India has published three other lists imposing a phased import ban on 310 different types of weapons and platforms, including lightweight tanks, naval utility helicopters, artillery guns, missiles, destroyers, ship-borne cruise missiles, light combat aircraft, light transport aircraft, long-range land-attack cruise missiles, basic trainer aircraft and multi-barrel rocket launchers.

The latest list has been put out by the defence ministry at a time when the global backlash against Russia over its Ukraine invasion has raised questions about the fate of new projects with that country, procurement of spares for existing Russian-origin weapons, and maintenance and servicing of legacy equipment operated by the three services.

The earlier list, published in March, included sub-systems that India imports from Russia for weapons and platforms, including T-90 and T-72 tanks, BMP-II infantry combat vehicles, warships and submarines, and anti-tank missiles.

The government has taken several steps in recent years to boost self-reliance, including raising foreign direct investment (FDI) in defence manufacturing, creating a separate budget for buying locally made military hardware and notifying lists of weapons, equipment and sub-systems that cannot be imported.

India is making planned, steady and focused progress to achieve Aatmanirbharta in the defence sector and several projects have been sanctioned for the local industry, former director general of military operations Lieutenant General Vinod Bhatia (retd) earlier said.

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Thanks to a number of measures and incentives, import ban, the iDEX programme, as well as Make-2 and DRDO programmes included, India is developing defence technologies that are on the cutting edge for the first time, sometimes exceeding the best the world has seen so far.

For the first time, the Indian defence industry is participating in the global supply chain in a significant way. It is supplying to leading Original Equipment Manufacturers (OEMs) worldwide, which is a testament to Indian products’ quality and workmanship. This is evident from the fact that nearly 50 percent of the Indian defence exports from the Indian defence industry are going to leading OEMs in the USA. The US Sealift Command, which has started sending naval ships to Indian shipyards, has found the capability of Indian shipyards to meet the highest standards in the world.

India is also working towards greater innovation and manufacturing prowess when it comes to drones. The focus is on creating some global firsts in this field as well.

With indigenous weapons and platforms, a new dimension is added to their capabilities. They have an advantage over the adversary since indigenously developed niche capabilities can remain unknown to the enemy- something that is not possible with imported off-the-shelf equipment.

The rapid success achieved in development of military equipment is also in part to the credit of public-private partnership (PPP).

The three positive indigenisation lists issued by the Department of Military Affairs during the last two years are examples of the Armed Forces’ conviction in the capability of the domestic industrial ecosystem. These lists prescribe the 310 platforms and equipment services they have chosen to procure from the Indian industry as part of a roadmap that meets their requirements. Moreover, contracts worth Rs 2.2 lakh crores and projects worth Rs 5.07 lakh crores are in different stages of procurement by the three Services.

There are several instances where the equipment manufactured by an Indian vendor has exceeded in quality compared to the global version of the same equipment. A case in point is K9 Vajra, which provides several value-added services like predictive maintenance using IoT, which provides higher availability of the platform, a feature which was not available in earlier versions of the same equipment.

The government and services have provided extensive impetus for such solutions, and to such firms. Defence minister Rajnath Singh recently launched 75 artificial intelligence applications. The Indian Navy has recently decided to launch 75 challenges under iDEX for developing new and emerging capabilities- some of which are not offered by any country to India.

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Topworth Group of Companies chairman Abhay Lodha has laid forth a plan for producing steel grades for land and naval defense. “We will seek to bring world-class technology to India and build skill sets in the country so that we can supply top-of-the-line platforms for our Armed Forces, cut military product imports, and generate high-skill jobs,” Abhay Lodha says.

The defense ministry has identified specific industries from which to get industrial expertise from the private region. Among the programs are Naval Utility Helicopters, Light Utility Helicopters, submarines, and Naval Multi Role Choppers.

Abhay Lodha stated, “the indigenous Armour plate for ballistic protection is one of the Topworth’s products. Some of its goods are ground-breaking, while others are straightforward import alternatives for Indian contractors seeking to maintain their supply chains closer to home. Naval destroyers, offshore patrol boats, and floating docks will be built using the latter.

Other items will be utilized in the building and repair of Coast Guard boats and navy ships. Topworth’s materials will be employed in battle tanks, missile motor casings, combat vehicles, and artillery cannons in land defense”.

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“The basic principle of security is that you should have your own customised and unique system, only then it will help you. If ten countries have the same type of defence equipment, then your armies will have no uniqueness. Uniqueness and surprise element can be brought only if the equipment is developed in your own country.”

“When we bring weapons from outside, it’s process is so long that by the time they reach our security forces, many of them have become outdated,” Modi stated.

He encouraged the industry to leverage India’s information technology prowess, calling it country’s “great strength”. “The more we use this power in our defence, the more confident we will be in our security.” Citing the example of cyber security, he said, even it has become a “weapon of war” and “a matter of national security”.

He said that this year’s budget “has a blueprint for developing a vibrant ecosystem from research, design and development to manufacturing within the country” and has set aside nearly 70 per cent of the capital allocation for the domestic industry. He mentioned that since nearly 200 items were put under negative imports list in the last two years contracts worth Rs 54 thousand crore have been signed for domestic procurement, and apart from that the “the procurement process related to equipment worth more than Rs 4.5 lakh crore is also in different stages.” He said a third positive indigenisation list will be announced soon.

The government, he said, has issued 350 new industrial licences for defence manufacturing in the last seven years, compared to 200 such licences that were issued between 2001 and 2014.

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The defence ministry on 28 March said it plans to procure military equipment worth Rs 5 lakh crore from the domestic industries in the next five to seven years in line with its policy of promoting indigenous defence manufacturing.

Minister of State for Defence Ajay Bhatt put out the projected figure of procurement from domestic sources while replying to a question in Rajya Sabha.

In August 2020, the ministry announced that India will stop the import of 101 weapons and military platforms like transport aircraft, light combat helicopters, conventional submarines, cruise missiles and sonar systems by 2024.

A second list, putting import restrictions on 108 military weapons and systems such as next-generation corvettes, airborne early warning systems, tank engines and radars, under a staggered timeline was issued in May last year.

In December, the ministry released a list containing 2,500 items, which have already been developed indigenously.

It also released a list of 351 equipment that will be developed within the country by December 2024.

The minister in his reply mentioned the lists and the government’s priorities.

“The positive indigenisation list comprises defence equipment which will be designed, developed and manufactured over a period from 2020 to 2025,” he said, adding that the it was not possible to assess at this juncture the actual on account of the decision to not import the items.

“However, as per available projections, it is estimated that over approximately Rs 5 lakh crore worth of equipment included in both the positive indigenisation lists will be procured from domestic industry over the next five to seven years,” he said.

In the last few years, the government has taken a series of measures to boost domestic defence manufacturing.

In May last year, the government announced increasing the FDI limit from 49 per cent to 74 per cent under the automatic route in the defence sector.

India is one of the largest importers of arms globally.

According to estimates, the Indian armed forces are projected to spend around USD 130 billion (one billion is equal to 100 crores) in capital procurement in the next five years.

The government now wants to reduce dependence on imported military platforms and has decided to support domestic defence manufacturing.

The Defence Ministry has set a goal of a turnover of USD 25 billion (Rs 1.75 lakh crore) in defence manufacturing in the next five years that included an export target of USD 5 billion (Rs 35,000 crore) worth of military hardware.

The government on Monday said that a total of Rs 3,343 crore has been received as foreign direct investment (FDI) in the defence sector since 2014.

In response to a question in Rajya Sabha, Defence Minister Rajnath Singh said the defence sector needs continuous investment for capacity enhancements and the creation of state-of-the-art technologies.

“During the period from 2001-2014, a total FDI inflow of about Rs 1,382 crore was reported and from 2014 till date, a total FDI of about Rs 3,343 crore has been reported,” he said.

To a separate question, Minister of State for Defence Ajay Bhatt said the “term ‘Matryr’ is not used in Indian Armed Forces.”

He was asked about the definition of martyr and whether the government has stopped the use of the word for those who made supreme sacrifices in the line of duty.

Asked whether the government is considering a system of conferring letters of acknowledgement from the President and the Prime Minister’s Office on the families of armed forces personnel killed in action, Bhatt said no such proposal has been received for consideration.

To another question, Bhatt said the government created the Defence AI (Artificial Intelligence) Council (DAIC) in 2019 for providing necessary guidance to enable and effect the development of an operating framework for the adoption of the application of AI in the defence sector.

He said all the three services have established institutional mechanisms in the form of AI Sub Committee and Joint Working Group on AI.

“As part of the data management framework, the services have formulated data policy and appointed data management officers,” he said.

Bhatt also said that the budget allocated and utilised in the past three years for the research and development of indigenous defence aircraft was Rs 3,280 crore and Rs 2,835 crore respectively.

He said 100 per cent rate of success has been achieved for the various research carried out for the development of indigenous defence aircraft.

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In a presentation made to the Union cabinet secretary in late February, a sectoral group of secretaries (SGOS) identified defence manufacturing as a key category to capitalise on India’s potential and develop it as a manufacturing hub by 2047 with a 25% share in the GDP.

Defence manufacturing, pharmaceuticals and biotechnology, semiconductors, capital goods, and machine tools are among the top categories identified by the SGOS for a major ramp-up over the next 25 years.

Prime Minister Narendra Modi had recently said India must aim for new defence-related innovations developed domestically to truly surprise the adversary. The wheels for greater ‘atmanirbharta’ in the defence sector have got moving.

In 2020-21, 64% of India’s budgetary outlay for defence went towards indigenous options. A 68% target has been identified for next year with service-wise action plans to reduce the import dependency. India also recently inked a $375-million deal with the Philippines for export of the Brahmos missile system.

SGOS – comprising top officials from the ministries of external affairs, commerce, heavy industries, steel, textiles, MSME, labour and employment, tourism, pharmaceuticals, and chemicals and petrochemicals, besides the Department for Promotion of Industry and Internal Trade and the Central Board of Indirect Taxes & Customs – has identified 25 year targets for India’s commerce and industry growth.

While it has set a target of $150 billion for defence manufacturing by 2047, the group has proposed that pharma and biotech grow to a $500-billion industry by then. Indian manufacturing sector’s share in GDP is estimated at 13% against a global average of 16% and China’s 26%. The aim is to finalise the 2047 plan by May this year.

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Major incentives for the Indian defence manufacturing industry in the Budget includes reserving 68% capex acquisition budget for weapons purchases from the domestic market and increased allocation for border roads development.

The industry has welcomed the plan to earmark a significant part of the Rs 19,000 crore plus research and development budget of the defence ministry for the private sector that is gearing to develop major platforms for sale to the armed forces as well as exports.

“Our government is committed to reducing imports in equipment for the armed forces…defence R&D will be opened up for the industry, startups and academic with 25% of the defence R&D budget earmarked,” finance minister Nirmala Sitharaman said.

Though contours of the allocation have not been disclosed, the Defence Research and Development Organisation is expected to play a major role in handholding the private sector with joint development projects. Promoting a collaborative model for research, the minister said that a special purpose vehicle model could be adopted for joint development of systems.

“Private industry will be encouraged to take up design and development of military equipment in collaboration with DRDO through an SPV model,” she said. Defence minister Rajnath Singh welcomed the move to promote R&D by the private sector.

“Substantial amounts have been allocated towards research and development in several sectors including defence. The proposal to reserve 25% of R&D budget for startups and private entities is an excellent move,” the minister said.

Announcing several measures aimed at boosting the Indian defence manufacturing sector and reducing imports, Sitharaman said that this year 68% of capital expenditure budget will be reserved for domestic procurement. This is a step up from last year, when 63% of capital budget was earmarked for domestic purchases.

The minister took up another longstanding demand of the industry for a robust testing and certification body, announcing that an umbrella organisation will be set up for the same in the coming financial year.

“Creation of a nodal body for setting up testing and certification requirements of defence systems and platforms will help domestic industry through faster processes and cost-efficiency,” Society of Indian Defence Manufacturers president SP Shukla said. The government has allocated Rs 5.25 lakh crore (including pensions) for the defence forces this year, which includes capital expenditure of Rs 1.52 lakh crore, a 12.8% increase in the capital budget for forces.

The defence ministry also spent an additional Rs 21,000 crore in the 2021-22 financial year above the budgetary allocation following the LAC standoff with China that necessitated emergency procurements of arms and equipment and creation of border infrastructure for troops.

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