Private sector is also hoping for a high budgetary allocation for defence capital expenditure since it will translate into more acquisition programs fructifying

New Delhi: With big-ticket capital acquisition programs like submarines, light tanks, and fighters slated to be rolled out in the new financial year, the defence forces and the industry are hoping for a larger allocation in the upcoming annual budget.

Sources in the defence and security establishment said that all the three Services have sought more funds in their presentations to the Defence Ministry, which in turn has taken it up with the Finance Ministry.

What is also hoped for is the institution of a non-lapsable fund for modernisation program.

The private sector, meanwhile, is also looking for a high budgetary allocation for defence capital expenditure since it would translate into more acquisition programs fructifying.

Sources said there is no doubt that the pension allocation will see a massive hike given the revision of the One Rank One Pension scheme, which will result in an additional annual expenditure of Rs 8,450 crore, apart from payment of arrears amounting to Rs 23,638 crore over a period of three years.

In the 2022-23 budget, the government had increased the capital outlay for procurement of new equipment to Rs 1.52 lakh crore, from the revised estimates of Rs 1.38 lakh crore.

Big-Ticket Items On The Board

Project 75(I), which entails building six new submarines under the strategic partnership model, is a big-ticket item for the Navy, sources said. The plan is to complete the process of contract signing within the next financial year and also push for the purchase of 27 Rafale marine fighters, the sources added.

However, they admitted that a back up plan was in place to order for more Scorpene class submarines in case the P-75I remains stuck, as reported earlier on multiple occasions.

The Navy will also be inking a contract for procurement of specialised naval drones this year, sources added, besides catering to the past payment schedule for ongoing projects like new frigates and destroyers.

From the Indian Air Force’s perspective, the sources said that additional fighters are high on the agenda. The government has to take a call on whether it wants to go in for MRFA (Multi-role Fighter Aircraft) or talk directly with the French firm, Dassault Aviation, for additional Rafale fighters.

Asked about the immediate big expenditure, the sources said payments are due for the S-400 air defence systems and upgrade of certain Sukhois to carry additional BrahMos missiles, besides purchase of other missiles and drone systems.

The Army, the sources said, is looking at a large number of inductions during the new fiscal, including new artillery gun systems and drones. The force has been able to spend almost the entire money allocated for the year, they pointed out.

Multiple sources said that a non-lapsable fund is necessary to keep the modernisation process on.

“At times, the entire allotted money is not spent because of payment schedules and also because the delivery is delayed. This does not mean that the money is not required. A non-lapsable fund would ensure that the modernisation process is consistent,” a source in the defence establishment said.

Private Sector Eyes A Jump

While the big companies are eyeing more contracts, smaller players are hoping the government will give a leg up to research and development (R&D).

“We are happy that R&D in defence will be a focus area. Inviting private industry into defence research has the potential to level the playing field between India and defence exporting countries,” Wing Commander Sai Mallela (Retd.), CEO-defence, Grene Robotics, said.

Sandeep Shah, co-founder & MD at Optimized Electrotech, said that amidst a global recession scare, India is poised to grow.

“We must utilise this opportunity to increase our absolute defence spending as well as our percentage GDP spending,” Shah said. “The R&D allocation given to the DRDO [Defence Research and Development Organisation] and other similar entities must also include a budget for procurement from startups which have innovative products. This will encourage the industry to invest further in innovation for defence,” he added.

Crown Group chief financial officer Jitender Mittal said the defence industry expects the Budget to focus on R&D, speedy orders, creation of testing facilities and an ecosystem to support innovation for the defence and aero industry.

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