Budget 2017 Expectations: Defence sector

About Rs 2.58 lakh crore funds were allocated for the defence sector, out of which Rs 88,000 crore was for capital expenditure.  In the last four years, Rs 35,000 crore towards capital expenditure has not been utilised and every year 10 per cent of the funds lapse. The procurement system need be streamlined to ensure that the lapse in defence budget is not more than 2 to 3 per cent.

R.D. Vakil, Director (Marketing), Solar Industries India, gave clarification on budget expectations for the sector. The government has strongly made a pitch for ‘Make in India’ and those companies which ventured into defence production should be encouraged by way of

(a) A moratorium on principal payment of loans for 2–3 years.

(b) IT exemption for similar periods, as defence procurement gestation period is very large due to various testing and validation processes.

(c) The country has acute shortage of ammunition. Hence, we expect the budget to increase by 10 per cent as defence preparedness is top priority of the government.

Pankaj Pandey, Head of Research, ICICI Direct said,”For FY17-18, we expect 8.7 per cent increase in overall defence allocation to approximately Rs 2,78,127 crore. The capital and revenue expenditures are likely to witness increased allocations of 6 per cent and 10 per cent to Rs 91,520 crore and Rs 1,86,607 crore, respectively”.