SME Times News Bureau | 28 May, 2018
A
new ASSOCHAM-KPMG
joint study suggested
that the government should incentivise private enterprises to push
the defence manufacturing sector.
The
study titled, 'Creating a level playing field to facilitate Make in
India in defence,' jointly conducted by The Associated Chambers of
Commerce and Industry of India (ASSOCHAM) and global professional
services firm KPMG, said the government to incentivise private
enterprises for developing large scale research and development (R&D)
and manufacturing capabilities.
India's
gross defence budget is expected to reach US$ 112 billion (bn) by
FY27 from $45 bn announced by the Government of India in 2018-19,
owing to significant steps been taken by the Centre to bolster
country’s position as a major aerospace and defence power, noted
the study.
It
also noted that while in 2018-19 the budgetary increase was a meagre
7.8 per cent over the previous year, it is expected to clock an
estimated compound annual growth rate (CAGR) of about 11 per cent
until FY27.
The
study however raised concerns that about 10 per cent of defence
budget is surrendered to Ministry of Defence (MoD) at the end of each
financial year owing to underutilisation as the reserved budget is
not mapped with capital acquisition.
It
said that country's capital expenditure for defence procurement is
expected to exceed $250 bn over the next 10 years, primarily to
replace the Soviet-era vintage equipment and meet the growing
modernisation needs of Indian Armed Forces. However, out of this the
domestic industry would only be able to manufacture defence equipment
worth just about $80 bn while rest of it would have to be imported.
It
said that a vibrant domestic manufacturing ecosystem that includes
both public and private defence manufacturing entities is essential
for success of 'Make in India' in the defence sector.