Resource Allocation for Indian Armed Forces: An Update

There is no meagre resource allocation for defence modernisation and allocation for modernisation under total Capital Outlay for defence services has gone up from Rs 80,959.08 crore in FY 2019-20 to Rs 1,32,301.27 crore in FY 2023-24.

The projected and allocated funds under Capital Acquisition (Modernisation Budget) in BE 2023-24 are as follows:

(Rs in crore)

Capital Acquisition (Modernisation Budget) Projection BE 2023-24 Allocation BE 2023-24



The resource allocation is optimally utilised towards operational activities.

If required, the schemes are reprioritised to ensure that urgent and critical capabilities are acquired without any compromise to operational preparedness of the Defence Services.

With a view to encourage indigenous industry to contribute to defence modernisation, funds for the financial year 2023-24 have been earmarked in the ratio of 75:25, where 75% i.e. Rs 99,223.03 crore is for Domestic procurement and 25% i.e. Rs 33,078.24 crore is for Foreign procurement.

Further, the Government has taken several policy initiatives in the past few years and brought in reform to encourage indigenous design, development and manufacture of defence equipment, thereby promoting self-reliance in defence manufacturing & technology in the country.

These initiatives, inter-alia, include:-

  • According priority to procurement of capital items from domestic sources under Defence Acquisition Procedure (DAP)-2020;
  • Notification of four ‘Positive Indigenisation Lists’ of total 411 items of Services and four ‘Positive Indigenisation Lists’ of total 4,666 items of Defence Public Sector Undertakings (DPSUs), for which there would be an embargo on the import beyond the timelines indicated against them;
  • Simplification of Industrial licensing process with longer validity period; Liberalisation of Foreign Direct Investment (FDI) policy allowing 74% FDI under automatic route;
  • Simplification of Make procedure;
  • Launch of Mission Defspace; Launch of innovations for Defence Excellence (iDEX) scheme involving start-ups & Micro, Small and Medium Enterprises (MSME);
  • Implementation of public procurement (preference to Make in India) Order 2017;
  • Launch of an indigenisation portal namely SRIJAN to facilitate indigenisation by Indian Industry including MSME;
  • Reforms in Offset policy with thrust on attracting investment and Transfer of Technology (ToT) for defence manufacturing by assigning higher multipliers;
  • Establishment of two Defence Industrial Corridors, one each in Uttar Pradesh and Tamil Nadu;
  • Opening up of Defence Research & Development (R&D) for industry, start-ups and academia with 25 percent of Defence Research and Development budget;
  • Progressive increase in allocation of Defence Budget of military modernisation for procurement from domestic sources, etc.

This information was given by State Defence Minister of India Shri Ajay Bhatt in a written reply to Adv Dean Kuriakose and Shri Anumula Revanth Reddy in Lok Sabha today.