The United Progressive Alliance has placed national security on a high pedestal. Finance Minister Pranab Mukherjee on Monday allocated Rs164,415 crore ($36 billion) for defence and said that more will be given if needed.
This marks an over four per cent increase from the 2010-11 allocation of Rs.147,344 crore.
Presenting the annual Union Budget, Mukherjee also told the Lok Sabha that the capital expenditure for defence in 2011-12 would be scaled up to Rs.69,199 crore, up from the Rs.60,000 crore in 2010-11.
Mukherjee allocated Rs 1,47,344 crore towards defence in 2010-11 budget. In 2009-10, the allocation for defence was Rs 1,41,703 crore.
A lump-sum ex-gratia compensation of Rs 9 lakh for 100 per cent disability to be granted for personnel of Defence and Para Military forces discharged from service on medical ground on account of disability attributable to government service.
The defence industry in India is poised at an inflection point in its expansion cycle driven by the modernization plans, the increased focus on homeland security, and India’s growing attractiveness as a ‘home market’ defence-sourcing hub.
Upbeat on India’s Defence Spend
A joint study by CII-KPMG, Opportunities in the Indian Defence Sector: An Overview, reveals that Indian industry is upbeat about the opportunities in defence and aerospace, and eager to grow its industrial capabilities in this space, but is looking to government to continue its process of developing and fine-tuning the procurement regime and industry drivers that will enable industry to grow a robust and sustainable defence industry in India.
According to a study by Confederation of Indian Industry (CII), India is in the process of signing defence deals worth nearly $42 billion, including a $10.4-billion deal for 126 multi-role combat aircraft, making it one of the most attractive markets for both global and domestic arms industry.
The joint study by industry body Confederation of Indian Industry (CII) and audit firm KPMG has also assessed that India has already signed defence deals worth nearly $25 billion in the last four years.
India currently procures approximately 70 per cent of it equipment needs from abroad, but aims to reverse this balance and manufacture 70 per cent or more of its defence equipment in India. While the government has put in place the building blocks to incentivise the growth of a domestic defence industry, the report identifies three areas where industry is seeking further government input. These are the procurement process, the need for a defence industrial strategy for India and tax and regulatory incentives.
