Amid escalating tensions with China and Pakistan, the Modi government might hike the defence Budget for the financial year 2021-22 to meet the “urgent requirement of the Armed Forces”.
According to media reports, the Centre is planning to modernise the Armed Forces under its plan to make India self-reliant that might force it to hike the defence Budget. Reports also suggest that the Centre will likely focus on indigenous procurement and research and development (RD) of arms and ammunition for the defence sector in the upcoming budget.
The Ministry of Defence has also requested the Finance Ministry to provide extra funds to set-up non-lapsable fund. Reports suggest that this request will likely be fulfilled in Union Budget 2021.
“There are several modernization projects that require immediate implementation because of the conditions on the LAC and LoC. These include helicopters, fighter aircraft, drones, artillery guns amongst others,” Financial Express quoted a senior defence official as saying.
The central government had also hiked the defence Budget by six per cent last year to meet the requirements of the Armed Force. Later, it announced an embargo on the import of 101 defence items and raised the foreign direct investment (FDI) limit in the defence sector to 74 per cent under the automatic route.
In its order, the Centre had said that FDI up to 74 per cent under automatic route shall be permitted for companies seeking new industrial licences while adding that it “will enhance Ease of Doing Business and contribute to the growth of investment, income and employment”.