The Union government allocated an additional Rs 5,000 crore to the country's defence budget, increasing it by over 12 per cent in 2014-15 over the previous year even as it opened the defence sector to increased foreign investment.
India has been the world's top arms buyer for the last three years but is still struggling to replace its ageing weaponry. With the additional Rs 5,000 crore, finance minister Arun Jaitley too India's defence budget to Rs 2,29,000 crore. In the interim budget presented by the UPA-II government in February, the amount was Rs 2,24,000 crore. But, even with the increased spending, India's expenditure on its military is less than a third of China's $145 billion expenditure.
"Modernisation of the armed forces is critical to enable them to play their role effectively in the defence of India's strategic interests," Jaitely told Parliament in his maiden budget speech.
Apart from allocating an additional Rs 5,000 crore for defence modernistion, Jaitely also granted Rs 1,000 core to accelerate the development of railways in border areas to address strategic concerns. But the biggest policy change for the sector came when Jaitley raised the foreign investment limit in the domestic defence industry from 26 per cent to 49 per cent. India's defence sector has attracted less than $5 million in foreign investments as foreign firms are reluctant to enter the Indian defence sector with their technology for a limited 26 per cent share.
But former defence minister AK Antony criticised the NDA government's move, saying it had succumbed to "pressure tactics" of "lobbies". Antony said that "the proposal to increase FDI from 26 per cent to 49 per cent in defence production will harm our national security".
"I know a very strong lobby is working. Their demand is 100 per cent FDI in defence. Successive governments since 1991 have overcome such pressure tactics. Their decision not to grant FDI beyond 26 per cent in the defence sector was well thought out," said the senior Congress leader.
Defence officials said that the hike in allocation comes at a time when the ministry has a number of key modernisation projects in the pipeline while some are in final stages. Big tickets purchases include the deal for 126 fighter jets from France, 22 Apache combat choppers, 15 Chinook heavy lift helicopters and 145 ultra light howitzers. Besides, a Mountain Strike Corps for the China border has also been raised.
Jaitely, who is also the defence minister, kept aside Rs 1,000 crore to implement the one-rank-one-pension (OROP) scheme, which was announced by the UPA-II government. OROP guarantees that soldiers of the same rank and duration of service will receive the same pension, irrespective of the year of their retirement. Jaitley also said that a war memorial and a war museum will be built in the heart of Delhi, near India Gate, at a cost of Rs 100 crore.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}