Capital Expenditure

Overview:

India’s initiative towards a more sustainable indgenous defence manufacturing sector would further lead to a rise in the capital expenditure in order to meet it’s new set aim, ‘Atmanirbhar Bharat’. The government intends to be an overall guide that will provide the country’s defence manufacturing capabilities a targeted, systematic, and considerable boost for self-reliance and exports. The money spent by the government on the development of machinery, equipment, buildings, health facilities, education, and so on is known as capital expenditure. It also covers the costs of acquiring permanent assets such as land, acquiring defence equipment as well as government investments that provide earnings or dividends in the future. These expenditures lead to the formation of assets, allowing the economy to generate revenue by expanding and enhancing manufacturing facilities and increasing operational efficiency. It also facilitates labour engagement, assesses the economy, and strengthens the economy’s potential to generate more in the future.

Expenditure trend in India:

India is one of the world’s greatest importer of defence equipment. ‘Make in India’ has sought to change in recent years by boosting the private sector’s engagement in defence manufacturing and research and development. The manufacturing component is progressing slowly, while R&D has gained traction. In the previous ten years, India’s entire defence spending has grown at a pace of 9% each year. In light of escalating tensions with bordering countries like Pakistan and China, the government intends to raise defence spending. The share of GDP dedicated to capital spending for defence, on the other hand, has been declining. During the preceding 10 years, the share of the defence budget spent on capital expenditures has declined. In 2011-12, 30% of total defence spending was spent, which subsequently dropped to 22 percent in 2018-19 (the lowest), before rising to 27 percent in 2020-21.

The Indian Army continues to be the greatest contributor to the defence budget of the three military forces i.e. the army, the navy and the airforce. Whilst the highest capital expenditure is incurred for the upgradation and development of the air forces with an amount of Rs 43,282 crore allocated to it for the year 2021-22. Yet again for the year 2022-23, the Indian Air Force received the largest part of the capital budget Rs 55,587crore, almost a 10% rise than the previous year. The Navy has been granted Rs 47,591 crore in capital expenditures, which is nearly comparable to the previous year’s allocation. The Army has once again been allocated the smallest share: Rs 32,015 crore.

What we do best.

Scandiya’s prowess in handling the process of sourcing and procurement of a wide range of defence equipment can assist in bridging the gap and provide for the structure to boost growth for the indegenous market.

Our in-depth analyses of government expenditures, as well as assessments of key changes in the organisation and operation of defence procurement agencies, are well-known.
Our work prioritises enhancing the efficacy of the interfaces between the armed forces client, the delivery agency, and the industry charged with building and delivering capabilities.

Thus aiding to the process of procuring defence equipment, meeting the new found robust growth in defence expenditure.

Overview:

Key takeaways from the budget

Expenditure trend in India:

What we do best.

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