Union budget 2024-25 is just around the corner with finance minister Nirmala Sitharaman having done the Halwa ceremony already. This is the third budget under Prime Minister Narendra Modi's tenure and all sectors are hoping for major announcements.
The defence start-up sector has pinned it's hopes on major improvements in the fiscal policies, increased funding for R&D in defence, training for drone technology and expansion of the PLI scheme, among a few major expectations.
Improved Policy Measures and Fiscal Incentives
Avdhesh Khaitan of Kadet Defence Systems states that for India to become a global drone hub by 2030, the budget should focus on policy measures and fiscal incentives. “In addition to that design linked incentive scheme is required, fiscal incentives should support research and development as it is critical for the advancement of any industry, and drones are no exception,” he added.
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Industry stakeholders demand fiscal allocations and incentives to support research institutions, start-ups, and companies developing new drone capabilities and applications.
Clear Roadmap For Technology Transfer Agreements and Export Regulations
Captain Nikunj Parashar, co-founder and CEO of Sagar Defence Engineering advocates for a conducive environment for defence exports to further contribute to the overall growth and sustainability of the defence sector in India.
“We also anticipate the budget to outline a clear roadmap for technology transfer agreements and export regulations that facilitate the entry of Indian defence products into international markets. By creating a conducive environment for defence exports, the government can help start-ups tap into lucrative foreign markets, further contributing to the overall growth and sustainability of the defence sector in India,” he added.
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Expansion of PLI Scheme & R&D Funds
In 2021, the government announced a subsidy of Rs 120 crore under the Production Linked Incentive scheme for drone manufacturers and their components.
The sector also acknowledged that the government's previous announcement of reserving 25 per cent of defence R&D funds for private sector engagement has been a positive step and is now anticipating a significant increase in funding dedicated to research and development in defence.
“As market demand accelerate, the industry is expecting the government to establish a separate R&D fund for research apart from the PLI Scheme in the Drone segment to keep industry players future ready. The allocation of funds towards research and development would be a significant step forward, as major orders come from the government and IA. This budget not only reinforces the importance of indigenous manufacturing but also promises to boost the capabilities of the industry,” Rama Krishna, co-founder & CEO, EndureAir added.
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