Focus on self-reliance & research to boost domestic manufacturing
The Government has allocated Rs 6,81,210 crore for defence in the new Budget, marking a 9.53 per cent increase from the Rs 6.22 lakh crore allocated in the current fiscal.
Out of this, Rs 1,80,000 crore, i.e., 26.43 per cent of total allocation, is capital outlay for defence services. On revenue head, allocation for the Armed Forces stands at Rs 3,11,732.30 crore which is 45.76 per cent of the total allocation.
Defence pension has received a share of Rs 1,60,795 crore, i.e., 23.60 per cent and balance Rs 28,682.97 crore, which is 4.21 per cent, is for civil organisations under the Ministry of Defence.
In the current geopolitical scenario where the world is witnessing a changing paradigm of modern warfare, Indian Armed Forces need to be equipped with state-of-the-art weapons and have to be transformed into a technologically-advanced combat-ready force.
Keeping this in view, the capital outlay of Rs 1,80,000 crore is 4.65 per cent higher than the Budgetary Estimate (BE) of FY 2024-25.
Out of this, Rs 1,48,722.80 crore is planned to be spent on capital acquisition, termed as modernisation budget of the Armed Forces and remaining Rs 31,277.20 crore is for capital expenditure on research & development and creation of infrastructural assets across the country.
Spending three quarters of the capital budget on procurement from indigenous companies will give greater fillip to domestic employment, strengthen native defence capabilities and enable the development of defence products which are not just geared to meeting the needs of the Armed Forces, but are also good for exports.
Rs 48,614 crore has been allocated for aircraft and aero-engines. This is significant as it represents a sizeable 27 per cent of the capital budget and demonstrates the gravity of the problem the Indian Air Forces, and to a limited extent the Indian Navy, face in their depleting fighter combat strength.
The emphasis on AI and deep tech will enhance defence and precision engineering by fostering a future-ready talent pool and strengthening manufacturing capabilities. The budget also aims to boost defence exports, targeting Rs 50,000 crore by 2029.
On the face of it, the defence Budget for 2025-26 does not depart substantively from the defence budgets presented by Modi Government in the recent past. But it aims to send out message to various stakeholders that it is seeking to build nation’s defence capabilities by continuing to pursue gradual reforms.
The Ministry of Defence has declared 2025 as the ‘year of reforms’. The Centre aims at “transforming the Armed Forces into a technologically advanced combat-ready force capable of multi-domain integrated operations.”
Focus on research and development, bolstering jointness & integration initiatives, and facilitating the establishment of integrated theatre commands, are among the areas that MoD has identified for focused intervention in 2025.