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Big impetus for private defence industry, 25 % R&D budget reserved

Source : The Economic Times

Big impetus for private defence industry, 25 % R&D budget reserved
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In a big impetus to the defence industry, Finance Minister Nirmala Sitharaman has announced that 25 percent of the annual research and development budget of the defence ministry will be reserved for private companies and start-ups, a move that will help break the monopoly of the public sector on developing cutting edge military technology.

Announcing several measure aimed at boosting the Indian defence manufacturing sector, the minister said that this year 68 percent of the capital expenditure budget will be reserved for domestic procurements, as part of measures to cut down on imports. This is a step up from last year when 63 percent of the capital budget was earmarked for domestic purchases.

“Our govt is committed to reducing imports in equipment for the armed forces…defence R&D will be opened up for the industry, start ups and academic with 25 percent of the defence R&D budget earmarked,” the minister said.

Promoting a collaborative model for research, the minister said that a special purpose vehicle model will be adopted for joint development of systems. “Private industry will be encouraged to take up design and development of military equipment in collaboration with DRDO through an SPV model,” she said.

The minister also took up another long standing demand from the industry for a robust testing and certification body, announcing that an umbrella organisation will be set up for the same in the coming financial year. This move has been welcomed by the industry.

“Creation of a Nodal Body for setting up Testing and Certification requirements of defence systems and platforms will help domestic industry through faster processes and cost-efficiency,” SP Shukla, President, Society of Indian Defence Manufacturers said.

The policy announcements are in line with a series of reforms in the defence sector being carried out since 2014, with the focus being on promoting a private sector led industry that can offer competitive products and focus on exports as well.

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