BHEL, BEL, others to gain from Govt move

Leading suppliers of defence equipment’s to India’s defence sector are set to make big haul as the country has decided to meet most of its requirements locally.
“We need to defer weapon import so that we push money into our economy, not into other countries economies. The import contract we have already signed can be discharged, but new contracts must be with domestic producers,” said Ministry of Defence (MoD) official.

It may be recalled that according to the Stockholm International Research Institute, India is the World’s third largest defence spender.
Meanwhile, the government has ordered the military to limit its first quarter (April-June) spending to 15-20% of the entire year’s budget.

Military spending, minus the payroll, would probably be cut by at least 20% from the allocations for the financial year 2020-21 and possibly by as much as 40%.
Cutting 20% would save the exchequer about Rs 40,000 crore, while the deeper 40% cut would save as much as Rs 80,000 crore.

Meanwhile, in a detailed exit strategy post the lockdown, the industry has suggested to the MoD that outsourcing of work from public sector units is urgently required and that the defence sector be placed under the essential services category to avoid a meltdown of the ecosystem.
Faced with the pressure of retaining its highly skilled workforce and anticipating a cut in government spending, the industry has suggested that as an immediate measure, funds earmarked for payments to companies in the US, Russia, Israel and the European Union be redirected to companies domestically.

A bulk of India’s capital acquisition budget still goes overseas due to the import dependency. This includes major cost intensive platforms like fighter jets, transport aircraft, helicopters and missiles, besides ammunition.

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