The Budget this year has proposed a more than 17.6 per cent increase in allocation for the Defence services as compared to last Budget.

The Finance Minister, Mr Pranab Mukherjee, has made a provision of Rs 1,93,407 crore for the defence services, up from Rs 1,64,415 crore provided last year. In the recent past, the Armed Forces has made several large-scale purchases including the over $10 billion deal to supply 126 fighter jets to the Indian Air Force which was won by the French firm Dassault Aviation. The deal is estimated to be the largest Indian defence deal.

The other big ticket proposals which got the nod during 2011 include the purchase of the C-17 Globe Master, C-130J Hercules and the $3-billion upgrade of 51 Mirage 2000 aircraft.

In the latest Budget, Mr Mukherjee has proposed providing Rs 79,579 crore for capital expenditure, up from Rs 69,199 crore provided during the previous Budget, an increase of 15 per cent.

The Minister also announced that the Government has approved guidelines for setting up of joint ventures companies by defence public sector undertaking in the public-private partnership mode.

The Budget has also proposed full exemption from basic customs duty to aramid yarn and fabric when used in manufacture of bullet proof helmets for supply to defence and police.

“The total defence services budget accounts for about 12.97 per cent (capital spending accounts for 38 per cent) of the total government expenditure. The entire industry covering space, civil aviation, defence, homeland security and research and development roughly accounts for about 20.71 per cent (capital spending accounts for 48 per cent) of total government expenditure,” said Ms Nidhi Goyal, Director, Deloitte India.

(This article was published on March 16, 2012)
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