India to spend 75 per cent of defence capital outlay for procurement from domestic industries: Rajnath Singh

Defence Minister Rajnath Singh. File Pic

India will spend 75 per cent of the total defence capital outlay for procurement from domestic defence manufacturers in 2023-24, Defence Minister Rajnath Singh said on Wednesday in a significant decision aimed at boosting the indigenous production of various weapons and military platforms.

The move will mean setting aside of around Rs one lakh crore for procurement from domestic sources out of the total defence capital outlay of Rs 1,62,600 crore announced in the Union Budget for the next fiscal, officials said.

According to official data, the value of India's indigenous defence production from 2019-20 to 2021-22 was Rs 2.58 lakh crore.

In 2020-21, the government had set aside 58 per cent of defence capital outlay for procurement from the Indian defence industry which was increased to 64 per cent in 2021-22. The allocation was further enhanced to 68 per cent in 2022-23.

Officials said over 250 business-to-business pacts and MoUs were firmed up at Aero India which are estimated to unlock investment to the tune of over Rs 79,000 crore.

The defence minister made the announcement of increasing the allocation further at an event where several agreements and technology transfer pacts were firmed up among a large number of defence companies which participated in Aero India 2023.

"The trust of the government and the society in our defence industry is increasing so much. The share of procurement from Indian vendors last year was 68 per cent. Inspired by the 'Amrit Kaal', that share has been directly increased to 75 per cent," he said.

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"If you take one step, the government has promised that it will take 10 steps forward for that. You talked to us about land to run on the path of development. But looking at your speed and height, we are moving towards providing you the full sky," Singh said, drawing loud applause from representatives of domestic defence firms.

The defence minister described the decision to enhance the allocation for the domestic industries as a "very significant" one for overall growth of the domestic defence sector.

"After this step, our defence industry will move forward with even more enthusiasm and will contribute in making the country's defence manufacturing sector more powerful and prosperous," Singh said.

"It is a matter of great pleasure that Aero-India 2023 witnesses this unprecedented decision," he said.

Singh said Aero-India 2023 inspired all the stakeholders to take a resolution that "we will not get tired anywhere on the path of our progress."

The 14th edition of Aero India at the Yelahanka Air Force station complex on the outskirts of Bengaluru was inaugurated by Prime Minister Narendra Modi on Monday and it saw participation of over 700 defence firms and representatives of around 100 countries.

Though the government had set aside 64 per cent for procurement from domestic suppliers, the actual figure was 65 per cent as against the original allocation, according to official data.

In his address, Singh also said that Aero India 2023 has shown that the Indian defence sector is ready to march ahead along with top global defence companies.

The MoUs and technology transfer agreements signed during Aero India will facilitate a new beginning for defence manufacturing in India, he said.

A new chapter in India's aerospace sector has begun today, he said referring to the agreements.

"Neither will we stop in the face of any obstacle, nor will we bow down in front of any problem. I am sure that this resolution will always remain in our mind," he said.

Aero India was aimed at promoting export of indigenous platforms like Light Combat Aircraft (LCA)-Tejas, HTT-40, Dornier Light Utility Helicopter (LUH), Light Combat Helicopter (LCH) and Advanced Light Helicopter (ALH).

The Defence Ministry has set a goal of a turnover of USD 25 billion (Rs 1.75 lakh crore) in defence manufacturing by 2024-25 that included an export target of USD 5 billion (Rs 35,000 crore) worth of military hardware.

In the last few years, the government has taken a series of measures to promote domestic defence production.

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