Key Highlights of Union Budget 2022 for Defence Manufacturing

Budget 2022 has introduced multiple provisions to boost Atmanirbharta in defence sector. The integrated approach of design & development of defence systems with the participation of industry & academia will revitalise the defence ecosystem. Provision for formation of Special Purpose Vehicle (SPV) for design development & production of major defence equipment will enable concurrent engineering and production in faster timelines.

The major announcement of 25% of budget earmarked for engagement of industry, startups & academia will provide the much-required boost for defence R&D. These provisions will enable Defence Research & Development Organisation (DRDO) to work vigorously with industry to give a quantum jump to self-reliance in defence. The 5.3% increase in capital budget allocation for DRDO up from 11,375 crore to 11,981.81 crore will accelerate the efforts for indigenous research & development (R&D) projects. The provision of 68% of the capital procurement budget for the domestic defence industry will further enhance the induction of the indigenous system in our armed forces.

DRDO has multiple modes of engagement with industry and academia. Some of them are extramural research, directed research, DcPP and TDF for the development of advanced technologies and systems. DRDO engages industry as Development Cum Production Partner (DcPP), Development Partners (DP), Production Agency (PA) during the execution of projects and programmes.   Currently, about 20,000 industries are engaged in the development of various systems, sub-systems and technologies directly and indirectly. DRDO has also identified 108 systems and subsystems for exclusive design and development by the Indian industry. DRDO technically supports the industry for realizing these systems on a requirement basis.

Through its Technology Development Fund (TDF) scheme, DRDO extends financial support to enable Indian Micro, Small & Medium Enterprises (MSMEs) and startups for indigenous design & development of defence products, components and subsystems. The fund is utilized for developing new technologies as required by DRDO, services, and DPSUs.

To further encourage the Indian industry, DRDO’s patents and relevant intellectual publications are available for the domestic industry free of cost. Indian industry is utilizing DRDO test facilities and proof & field firing ranges for ensuring quality defence products. The initiative announced in budget 2022 regarding a nodal umbrella body for wide-ranging requirements of testing and certifications of defence systems will greatly accelerate the development of defence systems by industry and will ensure the provisioning of quality products to armed forces.

DRDO is working with more than 250 academic institutes on different defence R&D problems for basic, applied and targeted research. DRDO has established 10 advanced research centres in various academic institutions. DRDO is also proposing to set up chairs for specific areas in various universities for long term engagement with academic institutions.

The current production value of DRDO developed system is approximately Rs 3.2 Lakh crore. With the announcement of Special Purpose Vehicle (SPV) and other important provisions, production value can grow exponentially. This budget has made a strong focus on Atmanirbharta, which will ensure that all major platforms are indigenously developed.