Defence Budget 2022: Capital acquisition budget for Domestic Industry increased to 68%

New Delhi: Further promoting the Government's push for Aatmnirbhar Bharat in the defence sector and to reduce dependence on imports of defence equipment, Finance Minister Nirmala Sitharaman today announced in the Union Budget 2022-23 that 68 per cent of capital expenditure for the defence sector will be earmarked for the local industry which is an increase of 10 percent from the last fiscal year. Sitharaman added that 25 per cent of the budget for defence research and development (R&D) will be earmarked for industry, start-ups, and academia.

The Finance Minister said, "Private industry will be encouraged to take up design and development of military platforms and equipment in collaboration with DRDO and other organizations through SPV (special purpose vehicle) model."

The Defence Ministry and the Services have been allocated Rs 5.25 lakh crores in the financial year 2022-23, which is an increase of Rs 47,000 Crores, or around 10 percent, from the last year's allocation of Rs 4.78 lakh crores.

The allocation for capital acquisition to modernise the armed forces by the Defence Ministry has witnessed a significant jump of around 13 percent from the last year's allocation of Rs 1.35 lakh crore to Rs 1.52 lakh crore this year ; out of which 68 per cent is earmarked for procurement from domestic sources. An amount of Rs 1.19 lakh crores has been allocated for defence pension budget.

Defence Minister Rajnath Singh has hailed the Union Budget 2022-23. In his message, he said earmarking 68 percent of the defence capital procurement for the local industry will give a fillip to the 'Vocal for Local' push and will boost the domestic defence industries. Singh said substantial amounts have been allocated towards research and development in several sectors including defence. He termed as an excellent move the proposal to reserve 25 percent of the R&D Budget for Startups and Private entities.

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