NEW DELHI — India announced its new defense budget Tuesday that will see $13.84 billion go toward promoting self-reliance among local businesses and reducing the country’s import dependency under its $22.26 billion fund for acquisitions of new weapons and military platforms.
India’s total defense budget for the financial year 2022-2023 is $54.2 billion, which includes $20.26 billion to cover pay and allowances for the more than 1.5 billion military personnel. This does not include the defense pensions of retired personnel.
This year, capital outlay meant for new weapons purchases for the Indian Air Force has been reserved for $7.43 billion; the Navy has been given $6.36 billion; and the Army has been allocated $4.28 billion.
The Indian Air Force will spend most of the money to cover existing commitments for French Rafale fighters, Russian S-400 air defense systems, Apache and Chinook helicopters, and Israeli medium-range surface-to-air missile systems.
The Navy will use its funds to pay for one aircraft carrier, destroyers, stealth frigates and multirole helicopters, which were previously contracted.
The Army will use its funds to pay for T-90 and Arjun MK1A battle tanks, BMP-2/2K infantry combat vehicles, Dhanush artillery guns, Akash air defense missiles, Konkurs-M and Milan-2T anti-tank guided missiles, and multiple types of ammunition.
But Amit Cowshish, a former MoD financial adviser for acquisitions, said it is unlikely the latest budget will fully meet requirements projected by the armed services.
The increase in the overall budget reflects the government’s resolve toward creating a self-sustainable industry with modern infrastructure — part of what’s known locally as Aatmanirbhar Bharat, or Self-Reliant India — the Ministry of Defence said.
Defence Minister Rajnath Singh welcomed the budget. “It is in line with the ‘Vocal for Local’ push and it will certainly boost the domestic defense industries,” he said, referring to the government’s call to support domestic businesses.
Some defense analysts and military officials also welcomed the news, but noted the budget’s amount won’t be able cover modernization shortfalls.
Senior military officials also warned business will continue as usual because nearly 70% of funds for arms procurement will go toward previous commitments with both domestic and foreign companies as well as via government-to-government deals. One Army official, who spoke to Defense News on the condition of anonymity, said indigenous procurement is a good notion but materiel produced by local companies still contain a significant amount of foreign-made technologies.
Last year, the government allocated about $11.77 billion from the total $18.4 billion procurement budget for domestic companies to manufacture weapons and platforms locally. However, military officials who spoke to Defense News on condition of anonymity, as they were not authorized to speak to the media, said almost 85% of the contracts were awarded to state-run companies, leaving private firms struggling to secure meaningful defense orders.
Cowshish noted that reserving a portion of government funds for domestic purchases is a good sign for local industry, but that unless the overall budget is substantially increased, the present situation will endure.
One MoD official said state-run companies were awarded defense contracts for LCA MK1 fighters, Arjun MK1A battle tanks, tactical software-defined radios, low-level transportable radars, Lynx U2 fire control systems, Konkurs-M and Milan-2T anti-tank guided missiles, AK-203 assault rifles, and advanced light helicopters, among other materiel.
The government has also allocated $1.6 billion in the latest budget for defense research and development programs, which have been solely controlled by 50 laboratories of the state-run Defence Research and Development Organisation. Those programs will now be opened to industry and academia, with 25% of the defense R&D budget earmarked for this change, the MoD said, adding that private companies are encouraged to participate in the design and development of military platforms and equipment in collaboration with DRDO.
This is meant to give the private sector more exposure to defense R&D efforts. The Society of Indian Defence Manufacturers, which lobbies on behalf of industry, said the move is a much-needed reform that will encourage innovation and investment.
Another consequence of the move, according to Laxman Kumar Behera, an associate professor for national security studies at Jawaharlal Nehru University, is that the DRDO, which has a near-monopoly on defense R&D efforts, will face greater competition.
Budget documents also revealed that the Indian military spent about $2.8 billion on emergency procurements amid its ongoing standoff with the Chinese People’s Liberation Army in the Ladakh region. China claims nearly 36,000 square miles of territory also claimed by India. The two countries fought a brief battle in 1962 over a boundary dispute, but it remains unresolved despite several bilateral diplomatic and military-to-military negotiations.
The new budget allocates $466.66 million for the state-run Border Roads Organisation for bolstering road-related infrastructure along India’s border, especially that shared with China. This is a 40% increase from last year’s allocation of $333.33 million.
Similarly, $566.13 million will go to the Indian Coast Guard to buy new ships and aircraft as well as to establish coastal security networks and other much-needed coastal security infrastructure. This amount is about 60% more than the previous year’s allocation of $353.33 million.
Vivek Raghuvanshi is the India correspondent for Defense News.