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How the Defence Sector benefits from Union Budget 2022

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New Delhi, Feb 01: At a time when India's presence in the world atmosphere is more profound than ever, the Ministry of Finance of the Central government during the Budget 2022 presentation in Parliament announced a plan to boost the Defence sector. Minister of Finance Nirmala Sitharaman stressed the implementation of Aatmanirbhar Bharat in the arena of armed forces. "Government is committed to reducing imports and promoting Aatmanirbharta in the armed forces.

    Atmanirbhar Defence Budget | Big impetus for private players | Oneindia News
    How the Defence Sector benefits from Union Budget 2022

    FM's announcements for Defence Sector

    • 68% of the capital procurement budget will be earmarked for domestic
      industries for 2022-23, up from 58% in 2021-22, (up 10 percentage points from FY22)
    • It's set aside 25% of its budget in defence research and development (R&D) for collaborating with the private industry.
    • FM announced that 5 % of Universal Service Obligation (USO) Fund would be provided for R&D and technology upgradation.
    • A new "independent, umbrella" body will be set up for private players to test new technology and get certified.
    • Private industry will be encouraged to take up the design and development of military platforms and equipment in collaboration with DRDO and other organizations through the SPB model
    • Allocated Rs 2.39 lakh crore against the Rs 2.33 lakh crores allocated last year to the Defence Ministry. Meanwhile, the pension budget is Rs 1.19 lakh crore.
    • According to Budget documents,
      the capital expenditure outlay for the defence sector has increased significantly, by 13%, in FY23 to Rs 1.52 trillion from Rs 1.35 trillion in FY22 while revenue and pension expenditure have remained stable. In total, the Budgetary allocation to the Ministry of Defence has risen 9% year-on-year to Rs 5.25 trillion in FY23 from Rs 4.7 trillion in FY22.

    The defence sector has been a key area of the Modi government since it came to power at the Centre. Last year, it had increased the capital outlay for the armed forces by nearly 19 per cent to modernise them. It also allocated Rs 1.35 lakh crore to the Defence Ministry for purchase of new weapons.

    The Modi government also aims to increase the exports in the defence sector. Earlier, Rajnath had said that India has exported defence items worth more than Rs 38,000 crore in the past seven years and the country hopes to become an overall net exporter soon.

    "We have an estimated Rs 85,000 crore industry of aerospace and defence. The contribution of the private sector in this has increased to Rs 18,000 crore".


    Rajnath Singh said," It is a Budget which would give a fillip to 'Make in India',
    boost demand and build capacities for a stronger, prosperous and confident India.

    "The 68 per cent of the defence capital procurement budget has been allocated towards local procurement. It is in line with the 'Vocal for Local' push and it will certainly boost the domestic defence industries," Rjanth Singh further wrote.

    The Budget outlines the Government's focus on Atamnirbharata and Prime Minister Shri Narendra Modi's vision for development and pro-people reforms. It is a growth-oriented Budget focused on harnessing the energies of New India."

    Defence Minister hailed substantial amounts being allocated towards Research and Development in several sectors including Defence. He hailed the proposal to reserve 25 per cent of the R&D Budget for Startups and Private entities is an excellent move.

    Defence expert Anil Gaur said," This is a very welcome step. Being Aatmanirbhar in defence will make us independent. If we keep importing defence equipment, we will never become Aatmanirbhar."

    Nirmala Sitharaman
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    Nirmala Sitharaman

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