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In this episode of the State of Economy Podcast, businessline’s Dalip Singh speaks with Lt Gen Kapil Aggarwal (Retired), a former Director General of Electronics and Mechanical Engineers about the pressing issues in defence funding and reforms. With India’s defence budget hovering around 1.9-2% of GDP for FY 2024-25, the conversation tackles whether this allocation is sufficient to meet modernisation needs and the increasing demands of future warfare.
The podcast highlights the gap between current defence spending and the Standing Committee on Defence’s recommendation of 3% of GDP. General Aggarwal offers insights on the lack of domestic absorptive capacity in defence manufacturing and the challenges of increasing indigenous production. He also discusses the crucial role of R&D in defense, emphasising the need for more investment from both public and private sectors.
With a focus on strategic reforms, the episode sheds light on the necessary policy changes to boost self-reliance in defence and the broader economic impact of a more robust defence sector.
General Aggarwal shares valuable insights into India’s defence budget and modernisation strategies, emphasising the importance of capital expenditure (CapEx) to sustain operational maintenance while enhancing the nation’s military capabilities. He explains that, with rising salary and pension costs, it is essential to focus on domestic defence manufacturing and indigenisation, which require robust research and development and the expansion of production capacity.
The conversation goes on about the early stages of the Agneepath recruitment scheme, exploring its potential savings in salaries and pensions in the long run, though immediate financial benefits are still in the future.
General Aggarwal addresses the concerns of the private defence industry regarding the dominance of public sector undertakings in major contracts. He concludes by stressing the importance of strategically blending the strengths of both sectors to ensure India’s operational readiness and long-term defence self-sufficiency.
(Host: Dalip Singh; Producer: Prethicshaa )
About the State of the Economy podcast
India’s economy has been hailed as a bright spot amid the general gloom that seems to have enveloped the rest of the world. But several sectors continue to stutter even as others seem set to fire on all cylinders.
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