Defence Industry Welcomes the Budget

After the announcement of Defence Budget on February 1, several Indian and foreign companies put out a statement regarding the budget. This year, the budget seeks to promote Indian industry by allocating 68 percent of the defence capital towards local procurement. The government has also set aside 25 percent of the annual research and development budget of the defence ministry for private companies and start-ups.

Regarding the budget, Federation of Indian Chambers of Commerce and Industry (FICCI) said that the budget would strengthen the drivers of long-term development. Commenting on the Union Budget 2022-23, President, FICCI, Sanjiv Mehta said, “We compliment the Finance Minister for presenting a forward-looking and growth-oriented budget that strengthens the drivers of long-term development. It builds on last year’s budget and scores high on several counts – consistency, capex led growth, transparency in numbers, energizing many of the stressed sectors and continues the focus on simplifying the taxation policy. FICCI is pleased with the set of announcements that were made today, and we look forward to the implementation of the same by the central government in close coordination with the states.”

He added, “We appreciate the government for not being hemmed in by the neoclassical trap of fiscal conservatism and providing a very clear glide path for fiscal consolidation that is in sync with the economic realities.” Further, he said that with a huge thrust on renewables, initiatives like a battery swapping policy and issuance of sovereign green bonds, PLI policy for solar modules the budget would take the India a step forward towards decarbonising the economy.

Mehta said, “Some of the other suggestions from the constituents of FICCI that found a place in the budget include the extension of the concessional tax rate period for new manufacturing units by one more year, introduction of surety bonds in place of bank guarantees, setting up of digital banks, introduction of a central bank digital currency and promoting indigenisation of India’s defense imports. We thank the Finance Minister for positively considering these suggestions.”

CMD, Bharat Forge Ltd said, “I would like to congratulate the Finance Minister for a growth propelling budget with significant thrust on enhancing competitiveness, infrastructure development, holistic digital drive and promoting financial inclusion. The proposed New legislation for SEZs with states as partners coupled with heightened emphasis on the seven engines under PM Gati Shakti initiative should pave way for a New India that is recognized for its Speed, Productivity and Scale; thus, boosting the country’s overall investment attractiveness and export competitiveness.”

Welcoming this move, VP and Country Director for Thales in India, Ashish Saraf said, “Thales welcomes the forward-looking statements by the Union Finance Minister that seek to strengthen the vision of Aatmanirbhar Bharat. The allocation of 68 percent of the defence procurement budget for domestic equipment in FY23 is a positive step towards self-reliance. Moreover, efforts to foster innovation by earmarking 25 percent of Defence R&D budget to private firms, start-ups, and academia bode well for all stakeholders and will allow international OEMs to bring more technology into India. We also appreciate the budget’s emphasis on collaboration between government and industry, with private companies urged to take on the design and development of military platforms in collaboration with DRDO. These steps will enhance local capabilities and build our expertise at a world class level. We, at Thales, remain committed to strengthen our industrial footprint in India by developing our local teams, futuristic technologies and partnerships in line with the ‘Make in India’ initiative.”

MD, Sterlite Technologies, Ankit Agarwal said, “ “We believe that this budget will prove to be a Shot in the Arm for accelerating India’s Digital, Domestic and Defence ambitions. On the one side, it addresses digital connectivity for all through optical fibre and digital services in 100 percent of the villages by 2025. On the other side, it sets the foundation for India’s 5G readiness through spectrum auctions, R&D impetus, USOF allocation along with a boost for domestic manufacturing through a timely ‘Design-led manufacturing’ scheme.”

He added, “The move to allocate 68 percent of the Defence capital procurement budget for domestic players is also a positive stepping-stone towards self-reliance in hi-tech manufacturing. At a macroeconomic level, a 35.4 percent increase in capital expenditure will bring necessary investments and drive consumption. As India braces to reap benefits from this progressive budget, greater policy impetus for procedural simplification, such as single window clearances and more conducive models for private public investments, would act as a multiplier.”

Further he said that from a longer-term perspective, more government investment in digital infrastructure would be absolutely essential for building a robust digital economy.  In this context, a digital-first budget philosophy that focuses on digitalization of ministries’ budgetary allocations would ensure across the board acceleration of public services in addition to enhanced connectivity.

“Sixty-eight percent of defence procurement budget in 2022-23 is to be earmarked for domestic equipment. This is up from 58 percent in last fiscal. This will provide further impetus to greater participation of domestic industry in Defence Capital acquisitions. This is in line with the government’s approach to not import capital assets in all cases where the domestic industry can create products and solutions. Therefore, import of Capital assets for Defence will be resorted mainly in those cases which necessitate urgent procurements (generally self-defence) and in-house development of matching technology is unlikely in near to mid-term. This means the Ministry of Defence, its Departments and Services will have a larger than ever onus to carry out a thorough environment scan of in-house capabilities in defence production to identify, support and induct technologies, equipment and platforms to be able to justify any capital imports.” Said President Strategy & Operations, ARTPARK (AI & Robotics Technology Park), Cdr Syed Qais Hayat (R).

Group President, Crown Group of companies (Defence Engineering Division), Vice Adm Paras Nath (Retd.), Group President of Crown Group Defence said “It is heartening to see that part of the R&D budget has been allocated to the industry, Start-ups and academia. This will be a positive move in particular to start-ups and MSMEs to have their inhouse R&D”.





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