With the NDA government focusing on “Make in India” and pushing for defence modernisation, expectations of a boost to domestic manufacturing in the defence sector in the coming general budget are high.
India has one of the largest defence budgets in the world, but it also has the dubious distinction of being the world’s largest arms importer. While both India and China had similar defence expenditure of around $10 billion in 1990, China has now quadrupled its expenditure with rapid economic growth and planned modernisation. The difference could not be starker — while India has become the largest importer, China has graduated into the club of top exporters. Dr. Jaijit Bhattacharya, Partner, Government Advisory at KPMG, said: “The budget should have funding to develop institutional mechanisms to identify technologies that need to be developed for the Indian war fighting scenario. If we need to accelerate manufacturing in defence, we also need to increase the FDI limit in defence from 49 per cent to 51 per cent.”
Across the board there are expectations that the long-pending One Rank, One Pension scheme will get funds, with the Defence Ministry promising to finalise the scheme by March this year. Defence Minister Manohar Parrikar had earlier said that the Ministry would need an allocation of about Rs. 8,000 crore-9,000 crore for the scheme.
