Defence Budget Expectations: During the upcoming Finance Budget 2025-26 defence sector is expected to have major focus with increased allocations as the government aims to not only implement a massive modernisation and indigenisation, including likely creation of the theatre-commands that was announced by Prime Minister Narendra Modi earlier this year.
The upcoming budget, which is going to be presented by Finance Minister Nirmala Sitharaman on 1 February, is expected to pave the way for increased capital outlay in order to boost India’s capabilities thereby giving shape to the government’s focus on self-reliance and reduced import dependence, according to official sources.
Lt Gen (Retd.) Subrata Saha, Former Member NSAB and Deputy Chief of Army Staff, told ABP Live, “The government should provide financial support to help the Ministry of Defence actualise its declared intent of making 2025 as the ‘Year of Reforms’ aimed at transforming the Armed Forces into a technologically-advanced combat-ready force capable of multi-domain integrated operations.”
“There is an urgency in bridging defence capability gaps keeping in view the rapidly evolving security challenges due to the increasing proximity between China, Pakistan and now Bangladesh. We need to also leverage National Science, Technology and Engineering capabilities for Defence Research and Development,” said Saha.
On January 1, the Ministry of Defence announced that 2025 will be marked as ‘Year of Reforms’ wherein thrust will be given to making the armed forces technologically more advanced and combat-ready.
The government has also set a target of achieving defence exports worth Rs 50,000 crore by 2029 even as it looks at the Southeast Asian countries and smaller European nations to sell its defence products.
Defence exports touched a record Rs 21,083 crore in the financial year 2023-24, a growth of 32.5 per cent over the previous fiscal when it was Rs 15,920 crore. According to the Ministry of Defence, the exports grew by 31 times in the last one decade compared to financial year 2013-14. The private sector and defence PSUs contributed about 60 per cent and 40 per cent, respectively.
Puneet Kaura, Managing Director and CEO, SAMTEL AVIONICS, told ABP Live, “We’ve demonstrated that domestic manufacturing can offer substantial cost advantages while meeting advanced technical requirements. The key is to prioritize critical systems upgrades through phased implementation, while leveraging the existing infrastructure and expertise of private players like Samtel.”
Kaura added, “As a company that has successfully indigenized several critical avionics systems, Samtel advocates for a balanced approach to imports and indigenization. We believe in strategic prioritization of systems based on technical capability readiness, economic viability, and strategic importance.”
During the Finance Budget for 2024-25 the government announced a more than 4% increase in at nearly ₹6.22 lakh crore. However, the allocation is likely to remain 1-2% of the GDP, said the sources.
This year the government is likely to also focus substantially on ship-building as India is in need to warships owing to its naval prowess in the maritime domain, where also China has emerged as a threat.
Vivek Merchant, Director, Swan Defence and Heavy Industries Limited (formerly Reliance Naval and Engineering Limited or RNEL), “The Indian government’s emphasis on improving shipping infrastructure and promoting indigenous shipbuilding has significantly transformed the sector. India holds a mere 0.05% of the global market share in shipbuilding, in stark contrast to China, South Korea, and Japan, which currently dominate the industry.”
“Therefore, new government initiatives and improved budgetary allocations for ports and shipyards could be game changers, showcasing a clear vision for a robust maritime economy,” Merchant said.
He also emphasised, the announcement of India’s Maritime Development Fund (MDF) for long-term indigenous manufacturing projects and the anticipated Shipbuilding Subsidy (SBS) Policy could further strengthen the ecosystem, encouraging greater self-reliance and competitiveness.
“As we approach 2025, it is crucial for the Union Budget to prioritize investments in shipbuilding infrastructure, incentivize green technologies, and create export opportunities for Indian shipyards,” he added.
