BUDGET SERIES- Sector Focus on Defence
By Trisha Nagpal
By Bunty Sethi, UKIBC
31 July 2024
India has allocated £58 billion (approximately US $75 billion) for defence spending in the Union Budget 2024-25, an increase from last year’s £55 billion.
India’s defence budget for FY 2024-25, constitutes 12.9% of the total government budget, which is among the highest allocations to any ministry, and aims to bolster military capabilities and infrastructure, reflecting a strategic response to regional security challenges. This reflects an increasingly volatile global geopolitical and uncertain security climate.
But the budget is also indicative of India’s focus on two other imperatives: becoming self-sufficient (or more self-sufficient) in capability and defence technology, and growing defence exports. Capital outlay for defence is set at £16 billion, focusing on strengthening the Armed Forces’ capabilities and enhancing border infrastructure. Border roads received a 30% budget increase, and £430 million is allocated to the iDEX scheme to boost the defence start-up ecosystem.
The capital budget focuses on acquiring new weapons, systems, and equipment. It’s important to note this strong focus on capital outlay. While the total defence budget has risen by about 37% in the last five years, that allocated for capital outlay has risen by 55% over the same period.
To foster integrated capability planning, the capital demands of the Army, Navy, and Air Force are consolidated under a single ‘Defence Services’ head, rather than separate allocations. This approach aims to address critical capability gaps through modernization, maintaining a consistent upward trend in the capital outlay over the past decade.
Summary: India’s increased defence budget demonstrates a commitment to national security and modernization. The significant capital outlay and infrastructure development focus are crucial for strengthening the Armed Forces. The budget aligns with the past decade’s trends in revenue and capital allocations. The government’s emphasis on research and development is evident with the
new £8.3 billion corpus and a new scheme to strengthen deep technologies for defence, promoting ‘atmanirbharta’ (self-reliance).
To know more information on the Defence Sector, Contact:
Bunty Sethi, Consultant
