Budget 2022: ₹5.25 lakh cr allocated for defence, focus on domestic players

Union Budget 2022-23: The central government on Tuesday increased the defence budget to ₹5.25 lakh crore for 2022-23 from last year's allocation of ₹4.78 lakh crore with a major push on procurement of weapons and military platforms from domestic manufacturers.

Presenting the Union Budget in Parliament, Finance Minister Nirmala Sitharaman said 68% of the outlay for defence procurement will be set aside for buying from domestic industry and that 25% of the allocation for defence research and development (R&D) will be kept for collaboration with the private sector.

The overall defence budget of 5,25,166 crore including ₹1,19,696 crore for defence pensions is an increase of 9.8% compared to last year's total outlay. The defence budget excluding the pension component stands at ₹4,05,470 crore.

In the defence budget, the finance minister allocated ₹1,52,369 crore for capital expenditure in 2022-23 that includes purchasing new weapons, aircraft, warships and other military hardware.

The capital outlay is an increase of around 10% compared to the revised estimate of ₹1,38,850 crore for 2021-22. The figure at the budget estimate stage was ₹1,35,060 crore.

An allocation of ₹2,33,000 cr has been made for revenue expenditure that includes expenses on payment of salaries and maintenance of establishments, according to the budget documents.

For the Ministry of Defence (civil), the government has set aside ₹20,100 crore. 

Under the capital outlay, the Army has been given ₹32,015 crore as against ₹36,481 crore in the budget last year. The Army could spend only ₹25,377 crore out of the allocation.

The Indian navy has been given an allocation of ₹47,590 crore under capital outlay as against last year's budgetary outlay of ₹33,253 crore. 

The Indian Air Force has been allocated a total of ₹55,586 crore as the capital outlay as against last year's ₹53,214 crore. The IAF could spend ₹51,830 crore out of the allocation.

The finance minister today said that the government is committed to reducing imports and promoting self-reliance in equipment for the armed forces.  "68% of the capital procurement budget will be earmarked for domestic industry in 2022-23, up from 58% in 2021-22," she said.

Sitharaman said defence research and development will be opened up for industry, startups and academia with 25% of the defence R&D budget earmarked for it.

"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," she added.