Defence Budget 2022 Puts Spotlight On R&D in Defence; Reserves 68% of Capital Budget For Domestic Industry

In the Union Budget 2022-23 on Tuesday, a total of Rs 5.25 lakh crores has been allocated to the Defence Ministry and the Services this year. Overall, the budgetary allocation is creased by Rs 47,000 crores from last year's allocation of Rs 4.78 lakh crores which is around 10% compared to the  last year.

Furthermore, an amount of Rs 1.19 lakh crores has been allocated for defence pension budget of the ministry.

Out of the total defence budget Rs 1.52 lakh crore has been allocated for the capital acquisition to modernise the armed forces. Capital acquisition is meant for buying new and upgrading military equipment which is fundamental to the defence modernization plan of Indian Armed Forces.

Government’s thrust remains on the indenisation for the defence sector as 68% of capital is marked for the domectic industry.

“68% of the capital procurement budget for defence to be earmarked for domestic industry to promote Aatmanirbharta and reduce dependence on imports of defence equipment. This is up from the 58% last fiscal,” Finance Minister Sitharaman said. 

One of the finer points of the budget is the thrust on the R&D which is the proposal to reserve 25 per cent of the R&D budget for start-ups and private actors. Though not specific to defence, the fund is expected to contribute in building capability especially in advance technologies and defence start-ups ecosystem.

Defence Minister Rajnath Singh also commented on the proposal to set aside 25% of the defence R&D budget for start-ups and private entities in the financial year 2022-23 as an excellent move in the Union Budget.

Artificial intelligence (AI), geospatial systems, drones, semiconductors, green energy, space energy etc have immense potential to assist sustainable development," the finance minister stated.

She also announced that 5 per cent of Universal Service Obligation (USO) Fund would be provided for R&D and technology upgradation.

"Defence R&D will be opened up for industry, start-ups, and academia, with 25 percent of defence budget earmarked. 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 model," She announced.