Budget 2023: Increase defense procurements from private players, industry urges government

It is time to expedite procurement, ordering and budgeting process in the defense sector, President of Society of Indian Defense Manufacturers SP Shukla told Zee Business. He said that a lot of pain points which were there previously, have been removed over the past 3-4 years in the public and private sectors. These were creating hurdles in making investments in this sector, he added.

There is a lot of thrust on ‘Make In India’ initiative and the domestic procurement has increased from 50 per cent earlier to 68 per cent now. India’s reliance on exports is only one-third, Shukla said adding that it is a huge achievement.

His expectation is to take it to 80 per cent.

He also wants private share and public share procurement to be 50-50. Currently, procurement from the private sector is at 25 percent he said.

Echoing similar sentiments, MK Gupta, Co Chairman of Defense & HLS Committee in PHDCCI said that the private industry is looking at a bigger pie of the government’s defense procurements to prove its capabilities.

He said that the government has given the private sector an export target of USD 5 billion and it is correct that the industry will be able to sustain with foreign orders, the industry will gain confidence of foreign buyers only if the industry has a proven track record back home.

He also urged that the government must expedite implementation of PLI scheme in this sector.

Defense sector could see 10 per year on year jump in budget allocation in Budget 2023. In the last budget, Finance Minister Nirmala Sitharaman allocated Rs 5.25 lakh to the sector, which was up 10 per cent year-on-year.

Experts are of the view that the defense budget should be doubled and be made at least 3 per cent of the GDP. At present it is at 2 per cent.

Government is expected to make provisions in the Union Budget to reduce imports and promote ‘Make in India’.

Usually, the allocation is lower than what is demanded by the Indian armed forces. It was approximately Rs 1 lakh less than what was demanded by the forces.

Experts are of the view that the actual allocation this year could be less than what is being demanded, this time too.

One fourth of the allocated amount goes in meeting the pensions and salaries. The pension expenditure has increased 10 folds over the past two decades.

The government is emphasizing on building a domestic defense infrastructure in the country to not just meet its own requirements but also make for the world. The government is targeting a USD 25 billion turnover of defense and aerospace by 2025. This also includes USD 5 billion towards exports.

India is next only to US and China in terms of its defense expenditures. The country faces a two-prong threat from China and Pakistan. While the allocation in this sector is on the up, we could see higher defense budget, this year. Modernisation of Indian armed forces has been at the centre of this government’s priorities and it is important to increase the allocation.

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India is also stressing on the need to develop defense related products indigenously under the Atmanirbhar Bharat initiative and has already taken several steps in view of this. The focus is not just to make for its own requirements but for the world.