India’s defence budget lays out more money for local contracts, a new independent approval body and leaves a quarter for R&D

• The Indian government has earmarked 68% of its procurement budget for buying from domestic players.
• It’s also set aside 25% of its budget in defence research and development (R&D) for collaborating with the private industry.
• A new “independent, umbrella” body will be set up for private players to test new technology and get certified.

The Indian government and its push for self-reliance in defence isn’t taking a back seat this year. Finance Minister Nirmala Sitharaman announced that an even bigger portion of the budget will be set aside to specifically procure new equipment from domestic players.

Moreover, the government will be opening up defence research and development (R&D) to the larger industry for their contribution — this includes big wig companies, startups and academica. Around 25% of the defence R&D budget will be earmarked for collaboration.

Critics have pointed out that while India has a relatively large budget — it spends nearly 2% of its gross domestic product (GDP) on defence and has the third-largest defence spend in the world — it lags behind others when it comes to modernisation.

The private industry will also be encouraged to design and develop military platforms and equipment in collaboration with the Defence Research and Development Organisation (DRDO) and other organisations through the Special Purpose Vehicle (SPV) model.

“An independent umbrella body will be set up for meeting wide ranging testing and certification requirements,” explained Sitharaman on how the collaboration will play out.

She highlighted technologies like artificial intelligence (AI), geospatial systems, drones, semiconductors and its ecosystem, space economy, genomics and pharmaceutical, and clean mobility systems as areas of focus. “[They] have immense potential to assist sustainable development at scale and modernise the country,” said Sitharaman.