'Atmanirbhar' weapons, OROP make case for big defence budget boost

The Finance Ministry is set to release the Union Budget on February 1, Wednesday. The Indian budget comes at a time the world's largest democracy is presiding over G20 and has set an example of 'Atmanirbharta' in several sectors, most significantly in defence production. Amid heightened tensions along various emerging flashpoints in the geopolitical landscape, India's defence sector has big hopes from the Union Budget this year.  

India’s defence sector is heading towards self-reliance! #AatmaNirbharDefence pic.twitter.com/K8zHDKmTrW

— MyGovIndia (@mygovindia) April 23, 2022

In last year's budget, the Union government allocated Rs 5.25 lakh crore to the defence sector, marking a 10% increase from the 2021 budget. This time, the Centre has an increased focus on enhancing India's defence capabilities by modernising the armed forces and pushing for an increase in defence production. Thus, the defence sector may be looking at a big boost this year.  

Exports & Expenditure: What is the government’s target?

The Union government has set a turnover target of Rs 25 lakh crore in the defence sector by 2024. Additionally, an underlying target of Rs 5 lakh crore has been set for defence equipment exports. This year's Union Budget may include an increase in defence funds to meet these targets.

Further, India's bid to achieve self-reliance in defence production and cut down on its dependence on foreign powers for weapons amid tensions with Pakistan and China may prompt the Centre to boost the defence budget this year. 

India is the third-largest military spender in the world, after the United States and China, as per government data.    

The Union government is currently engaged in various defence deals for the export of indigenously developed light multirole fighter LCA Tejas. Malaysia has been cited as a potential buyer and Egypt has also reaffirmed its interest in procuring the Tejas fighter alongwith military radars, helicopters and other platforms developed by India.

Meanwhile, Vietnam and the Philippines have shown interest in buying BrahMos stealth ramjet supersonic cruise missiles. 

Defence budget focus areas

Nearly one-fourth of the Defence Ministry's budget goes into paying salaries and pensions of armed forces personnel. One of the biggest developments in India's defence sector this year is the Centre's decision to implement One Rank One Pension (OROP).   

The implementation of OROP will claim a significant portion of funds from the defence budget. 

Additionally, the focus on indigenisation of weapons and other defence equipment is expected to enable a boost in the defence budget. 

In keeping with its commitment to fight the future wars with Indigenous Solutions, #IndianArmy invites Indian Defence Industry to offer critical defence equipment for Emergency Procurement. #IndianArmy #InStrideWithTheFuture pic.twitter.com/eAHYEM3cp7

— ADG PI - INDIAN ARMY (@adgpi) September 18, 2022

India inducted numerous defence assets in its tri-services in FY 2022 under the Atmanirbhar Bharat campaign. Hindustan Aeronautics Limited, Defence Research and Development Organisation (DRDO), Mazagon Dock Limited, Bharat Electronics and Cochin Shipyard Limited are some of the notable producers of indigenous defence assets.  

The 12th edition of the Defence Exhibition called ‘DefExpo-2022' held in October in Gujarat’s Gandhinagar can be considered an indicator of the government’s plans for the defence sector. Organised on the theme 'Path to Pride', the exhibition displayed Land, Naval and Homeland Security Systems to bolster India’s national security.

According to data from the Indian Defence Ministry, the government has increased the procurement of domestic defence products from 50% to 68% in recent years. Estimates suggest that the figure is expected to rise to 75 to 80% this year.