Is meagre allocation for defence in budget, an indication to policy changes?

Written by: Dr Anantha Krishnan M

Bengaluru, Feb 28: Finance Minister Arun Jaitley's maiden full-fledged budget gave India's defence sector a hike of 9.46 per cent (Rs 2,46,727 crore) for the FY 2015-16. The increase of mere Rs 23,357 crore (current financial year estimates is Rs 2,22,370 crore) is seen as an indication of major policy changes this sector is likely to witness in the next six months.

The budget has disappointed those batting for more funds for the military modernisation. Even the SMEs and MSMEs too seem to be not jumping in joy yet, as they expected more from the Jaitley suitcase.

Budget 2015: Defence sector gets a hike

Let's wait and watch: Matheswaran

Air Marshal M Matheswaran (Retd), former Deputy Chief of the Integrated Defence Staff (Policy, Planning and Development) and currently an Advisor to Hindustan Aeronautics Ltd, told OneIndia that the mere 10 per cent increase doesn't help the cause of modernisation plan at the moment.

He, however, felt that the Finance Minister might have kept the slew of policy changes that are set to unfold in the near future.

"The FM has looked at larger businesses which would provide immediate results. While creation of jobs and technology availability are two key factors that would propel the Make in India mission, it would take time. I am connived that there's more in the offing in the future," Matheswaran said.

As reported in these columns earlier, Matheswaran wants some firm action seen on the 'Make in India' front.

"As of now it is a sloganeering and nothing substantial for all of us to see. I am hoping some inspiring policies are in the offing to boost the manufacturing sector in Indian defence," he adds.

Earlier the top IAF expert had suggested that India should have a vibrant development model on the lines of Defense Advanced Research Projects Agency (DARPA) in the United States.

Tax reduction on tech royalties welcome: Puneet

Puneet Kaura, Executive Director, Samtel Avionics, told OneIndia that the emphasis on Make in India in FM's speech was encouraging.

"We welcome the tax reduction on royalties on technologies from 30 per cent to 10 per cent. I believe that the excise and custom duties on certain items have been cut," .I expected an announcement on the tax holidays being talked about for defence companies in India to come through. Overall it is a satisfying budget Puneet said.

Samtel Avionics is among a few companies that got on to the Make in India wagon almost a decade ago.

Budget not inspiring for MSMEs: Dinesh

M C Dinesh, Federation of Karnataka Chambers of Commerce & Industry (FKCCI), Vice President, told OneIndia that the FM failed to replicate the passion at which the Prime Minister Narendra Modi has been driving the Make in India mission.

"At least his speech doesn't reflect the same. No way is the current budget going to inspire the MSMEs. We lack technology and funds. Skills on entrepreneurship had to be made into a separate curriculum. If the manufacturing sector needs to grow from the current 14 per cent to 20-24 percent of the GDP, then we need more proactive steps," Dinesh said.

Military modernisation to get hit: Brig Gurmeet

Brig Gurmeet Kanwal, former Director, Centre for Land Warfare Studies, New Delhi, wrote in the widely-respected Indian Defence Review (IDR) today that the marginal increase in the defence budget is grossly inadequate to give a boost to military modernisation that has been stagnating for over a decade.

"The increase in the allocation - partially neutralised by the high annual inflation rate that still hovers between 6 and 7 per cent, the steep fall in the value of the rupee against the US dollar vis-à-vis the traditional rise in the global prices of arms - was insufficient to give a major boost to the military modernisation that is necessary to meet the emerging threats and challenges," writes Brig Gurmeet in IDR.

arun jaitley

No need to get disappointed: Dr C G K Nair

According to Dr C G Krishnadas Nair, former Chairman of HAL, the budget emphasis strongly on the support being given by the government for making defence products indigenously in India.

"These are early days and greater cooperation among DPSUs, private sector and SMES will propel the Make in India mission more cost-effectively. We should not be disappointed by the marginal increase as it gives us more responsibility to put in all efforts to make maximum products for the defence needs within the country," says Dr Nair.

He is currently the professor and chairman of the International Institute for Aerospace Engineering and Management.

FM did justice to defence sector: Raj

G Raj Narayan, Founder and MD, Radel Group felt that the FM did justice to the defence sector.
"This is a good allocation for indigenous manufacturing. It would be good to see 25 per cent of this being reserved for MSMEs. Good to see the encouragement to our own industries," he said.

Our Take | OneIndia

With the Defence Procurement Procedure (DPP) being rewritten, as indicated by Defence Minister Manohar Parrikar, one needs to be patient to see the intent of the Modi government.

The unhappiness of SMEs and MSMEs, the foot soldiers of Indian defence in the backdrop of Make in India mission, is understandable. The separate Make in India policy being scripted currently should answer some of their worries.

Make in India has caught the imagination of the SMEs and MSMEs. From mere sloganeering it now quickly needs to get on to the action phase.

The menu is tempting, but can we go taste the cake now?

(The writer is a seasoned aerospace and defence journalist in India. He is the Consultant Editor (Defence) with OneIndia. He tweets @writetake.)

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