New Delhi, July 11 – The defence budget saw a modest 2 per cent increase of Rs.5,000 crore in the Union Budget 2014-15. This amount, Finance Minister Arun Jaitley told Parliament on Thursday, would cater for buying new equipment for the armed forces.
The defence budget went up from Rs.2.24 lakh crore presented by UPA in its interim budget in March this year to Rs.2.29 lakh crore. Jaitley, who also doubles up as defence minister, set aside Rs.1000 crore to cater for the One Rank One Pension (OROP) for the armed forces and Rs.1000 crore to build strategic railways for the armed forces near the international borders.
The radical policy change announcement in the budget was the automatic increase Foreign Direct Investment in the defence sector from the present 26 per cent to 49 per cent.
The FDI cap of 26 per cent had stifled the entry of foreign players into the Indian defence manufacturing industry. India has the dubious distinction of being the world’s largest arms importer since 2010. It imports 14 per cent of global arms. The increase in the FDI cap will attract a number of foreign players to invest in the sector say Indian defence analysts.
“The fact that we could only attract around $0.35 million per year since 2000 until March 2014 as FDI in defence or only around $0.16 million per year more than we attracted as FDI for coir industry, is a startling testimony to how off the mark we were on keeping FDI at 26 per cent,” a senior bureaucrat says.
In another allocation to boost indigenous industry, Jaitley also set up a Rs.100 crore initial corpus for a Technology Development Fund to assist Small and Medium Enterprises (SMEs).
This fund to boost SME participation in indigenous defence industry was first proposed by then Defence Minister Pranab Mukherjee in 2006 but never implemented.
Another several decade old proposal will finally see the light of the day. Jaitley set aside Rs.100 crore for a war memorial and war museum to be built at Princess Park near India Gate.
Speaking at a rally in Mumbai in January this year, Narendra Modi had attacked the Congress for its failure to build one. India, he said, was the only country in the world without a war memorial.
-INDIA TODAY
