23 February 2021

India increases funds for domestic procurements

by Jon Grevatt

India’s defence budget for 2021-22 provides a large increase for procurements from local industry, senior officials from the Ministry of Defence (MoD) in New Delhi have said.

Speaking in an MoD budget webinar on 22 February, Indian defence secretary Ajay Kumar said the new defence expenditure allocated about INR702 billion (USD9.7 billion) towards local defence acquisitions.

This allocation, he said, represents a year-on-year increase of 35%. Local procurements in 2020-21 received a budget of INR519 billion.

In the same online event, defence minister Rajnath Singh said India planned to spend a total of about USD130 billion (or about INR9.4 trillion) on military modernisation over the next five years, including expanded funding for domestic procurements.

Expanding orders for Indian-made defence equipment is expected to include contracts to supply the Indian Air Force and Indian Army with HAL’s Light Combat Helicopter (pictured). (HAL)

This funding included, he said, a INR480 billion contract awarded to Hindustan Aeronautics Limited (HAL) in February for 83 indigenously designed Tejas Light Combat Aircraft (LCA) for the Indian Air Force (IAF). Singh also confirmed that HAL is “likely” to win soon an order for its indigenously designed Light Combat Helicopter (LCH).

Singh added that during 2021-22 the MoD had already sanctioned – through the issuance of ‘Acceptance of Necessity’ (AoN) approvals – defence procurements worth INR750 billion. He said that 87% of this allocation (about INR652.5 billion) was linked to the government’s continuing campaign to produce defence equipment locally.

Singh said in the webinar that India’s efforts to allocate more funding towards defence procurement will be supported by an intention to accelerate the time the MoD takes to approve contracts.

India’s defence budget for 2021-22 provides a large increase for procurements from local industry, s...

Jane's Find unrivaled intelligence, consultancy and advertising solutions to the defence and national security sectors.