Expert Speak Young Voices
Published on Jul 16, 2022 Updated 7 Days ago
The budgetary restrictions on the Indian Navy stifle the indigenisation and innovation process.
India’s defence budget: The navy and its Atmanirbhar Bharat Mission India’s defence budget for 2022-23 demands a close examination in the context of the country’s changing geopolitical environment and the modernisation of the Indian armed forces. Notwithstanding the natural focus on the Indian Army (IA) and the Indian Air Force (IAF) due to the ongoing boundary crisis between India and China, both the Indian Navy (IN) and the role of that the Atmanirbhar mission is playing in the development and up-gradation of the IN’s weapons systems and platforms require particular scrutiny. Under the current Indian defence budget, there is a renewed focus and reorientation of security policies to break away from an exclusively continental focus. The IN has also played a contributing role during the Galwan crisis by strengthening India’s stance in ongoing negotiations. Second, Prime Minister Modi has aligned the vision of the country's development and security with an energised quest for Atmanirbharta or self-reliance to develop domestic military capabilities. There is an increase of 17.57 percent in the defence Research and Development (R&D) budget in comparison to 2021-22. A share of 25 percent of the R&D budget is dedicated to industry, start-ups, and academia. This allocation, aimed at promoting innovation and indigenisation is also a progressive step.

Under the current Indian defence budget, there is a renewed focus and reorientation of security policies to break away from an exclusively continental focus.

This piece will attempt to understand the pattern of the budget capital allocation towards the modernisation of the IN and how the element of Atmanirbharta is reflected in the budget for Indian naval acquisitions and modernisation. The IN is the central pillar of India’s maritime security and strategy to counter China’s coercion and belligerence. 

What do the numbers say? 

In 2022–23, the IN has been allocated a share of INR 47,590.99 crores as a capital outlay in comparison to INR 33,253.55 crores from the previous year's budget. The numbers reveal an increase of 43.11 percent in the capital outlay in 2022-23 in comparison to the allotted capital outlay for the Indian Navy in 2021-22.
Financial Year Allocated budget to Indian Navy (both Revenue and Capital) value in crores Overall budget of three services (both Revenue and Capital) value in crores Percentage Share of the IN in terms of service-wise allocation (in percent)
2021-22 56,614.23 3,47,088.28 16.31
2022-23 72,997.41 3,85,370.15 18.94
Source: Author’s own with figures drawn from the budget data t The above table suggests that for the years 2022-23, there is an increase in the Indian Navy service budget (revenue and capital) in comparison to the overall total sum of allocation to the three services (revenue and capital). In comparison to the previous year, there is an increase of 2.63% in the overall proportion of the IN’s share in the budget.
Financial Year Capital outlay for Indian Navy (figure in crores) Overall capital outlay for all three services (figure in crores) Share of IN in overall capital expenditure (in percentage)
2021-22 33,253.55 1,35,060.72 24.62
2022-23 47,590.99 1,52,369.61 31.23
Source: Author’s own with data drawn from the official defence budget  The second table suggests that the proportion of the capital outlay to the total capital outlay (of all three services) has also increased for the year 2022-23. For the year 2022-23, the percentage share is 31.23 percent in comparison to 24.62 percent for the previous year' budget. The capital outlay consists of 65.19 percent of the total allocation (including revenue and capital) to the Indian Navy in comparison to 58.73 percent for the year 2021-22. As per the 28th report of the Standing Committee on Defence, the projected capital outlay under the Budget Estimate (BE) of INR 67,622.96 crore in comparison to the allocated capital outlay according to the BE of INR 47,590.99 crore has a difference of INR 20,031.97 crore. Similarly, the gap between the projected and the allocated capital outlay value was INR 37,667.23 crore for the year 2021-22 as per the BE. These numbers show a closure of the gap in the value of difference between the projected capital and allocated capital in 2022-23 in comparison to the previous year. Thus, there are attempts being made to meet the capital requirements of the IN.

The Indian Multi-Role Helicopter (IMRH) to meet the requirements of all three services is to be followed through the Special Purpose Vehicle (SPV) model.

In a key step towards promoting domestic defence industries and Atmanirbharta, 68 percent of the capital procurement budget has been earmarked for the domestic industry in the 2022-23 budget, from 58 per cent in 2021-22. An overall 25 percent of the defence R&D budget is devoted to industry, start-ups, and academia promoting indigenous design and development and innovations related to major platforms and systems. Eighteen major platforms have been identified and announced by the Ministry of Defence (MoD) for industry-led design and development. To service the needs of the IN, Naval Shipborne Unmanned Aerial System (NSUAS) and 127 mm Naval Gun and Electric Propulsion Engines (EPE) for ships will be completed under the Make I category for design and development. The Indian Multi-Role Helicopter (IMRH) to meet the requirements of all three services is to be followed through the Special Purpose Vehicle (SPV) model.

Naval Indigenisation

The self-reliance on equipment, platforms, and systems has become a strategic necessity. The same concern has resonated in the indigenisation and “Make in India” scheme. In alignment with the modernisation of the IN under a rejuvenated national focus on self-reliance, a 10-year Integrated Capability Development Plan (ICDP) has been adopted. The ICDP has replaced the earlier 15-year Maritime Capability Perspective Plan (MPCC). The major change in planning will cater to the development of maritime theatre command and will provide more flexibility in modernisation given rapid changes in technology. The MoD has successively released three import ban lists including items meant for indigenous production. This has set the roadmap for the Indian defence ecosystem to work in accordance with the mission of Atmanirbharta in the domestic defence sector. Broadly, indigenisation will include the induction and up-gradation of major platforms which were contracted previously and will also include projects under development.

Platforms upgradation

The Indian Navy has in recent months inducted a major ALH system named Dhruv Mk III, a complete indigenously designed and developed helicopter by Hindustan Aeronautics Limited (HAL) with a Performance Based Logistics (PBL) provision. Dhruv is an effective twin-engine, multi-role, multi-mission new generation helicopter. Similarly, the DRDO has also developed Air Independent Propulsion (AIP), a critical technology that once upgraded and fitted in the submarines will increase their subsurface endurance, resulting in better operational capability. The first upgrade will take place for Kalvari class non-nuclear submarines by 2025. Another significant development is the Project 75 I Scorpene class six conventional submarines worth US $5.78 billion. The development of submarines in the series has led to the increase in indigenous content reaching up to 40 percent in the INS Vagsheer. In addition to this, a marine diesel engine is being developed for the first time in India. These Scorpene class submarines will possess advanced stealth features, long-range guided torpedoes as well as an anti-ship missile sensor suite amongst their operational capabilities.

The major change in planning will cater to the development of maritime theatre command and will provide more flexibility in modernisation given rapid changes in technology.

Major projects in the pipeline

As part of the capital budget expenditure for 2022-23, the most awaited Indigenous Aircraft Carrier Vikrant will constitute a major share of total indigenous content. In terms of anti-submarine warfare measures, the IN has plans to acquire Garden Reach and Shipbuilders Ltd. (GRSE) indigenously built ASW vessels aimed to replace Russian Abhay-class corvettes. The Nilgiri-class advanced stealth frigate of Project 17A which includes seven ships is being built at the Mazagon Dock Shipbuilders Ltd. (MDSL) and Garden Reach and Shipbuilders Ltd. (GRSE). The indigenous content in this project is around 75 percent, giving a boost to the  Atmanirbhar Bharat campaign in attaining self-reliance in the defence sector. The MoD has unveiled acquisition plans to procure items worth INR 76,390 crores under the ‘Buy (Indian)’, ‘Buy & Make (Indian)’ and ‘Buy (Indian-IDDM)’ categories. Out of this, an amount of roughly INR 36,000 crores has been allocated for the development of eight indigenous New Generation Corvettes (NGCs) for the IN. The top leadership in the Indian Navy is also keen on pursuing the long-term modernisation plan of acquiring an indigenously developed twin-engine deck-based fighter (a naval variant of Tejas) to be developed in partnership with the Defence Research and Development Organisation (DRDO), Hindustan Aeronautics Limited (HAL), and the Aeronautical Development Agency (ADA). Further, to engage domestic players like industry, academia, and start-ups, a Memorandum of Understanding (MoU) has been signed between the Defence Innovation Organisation (DIO) and Naval Innovation and Indigenisation Organisation (NIIO) to work out project “SPRINT” (Supporting Pole-Vaulting in Research and Development through Innovations for Defence Excellence (iDEX), Naval Innovation and Indigenisation Organisation (NIIO) and Technology Development Acceleration Cell (TDAC)). The initiative is aimed at promoting a culture of defence indigenisation and innovation within the country.

The indigenous content in this project is around 75 percent, giving a boost to the  Atmanirbhar Bharat campaign in attaining self-reliance in the defence sector.

Conclusion

The Indian Navy has to cater to the operational preparedness and compete against the Pakistani Navy and the larger Peoples Liberation Army Navy (PLAN). Additionally, India has to keep pace with rapid technological changes under budgetary constraints. The IN being a technology-savvy force requires additional resources to meet its operational and modernisation plans. Though IN’s capital capital outlay share has increased in comparison to the previous year, there still exists a gap between the projected amount and the allocated amount in the capital outlay budget. Second, the Indian naval shipbuilding industry is monopolised by public sector-led companies. Even the Defence Acquisition Procedure (DAP) devotes a section to the acquisition of naval ships and submarines with the indigenous design through MoD and Services Headquarters (SHQ) and selection of Indian shipyard(s) based on the existing infrastructure for a given project. This has remained a major obstacle in indigenisation as it does not let domestic private players grow and increases reliance on foreign vendors for critical systems and sub-components. The recent budget and major structural reforms are a progressive step towards breaking such a limited understanding of the shipbuilding sector and represent a push towards unshackling the potential of the private sector towards better and holistic indigenisation.
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.