An Indian made T-90 "Bhishma" main battle tank participating in Tank Biathlon in Russia

by Ajay Banerjee

New Delhi: With crores being spent annually by way of customs and excise duty on import of weapons, equipment, engines, spare parts and raw material, the Ministry of Defence is seeking a bailout from the government, asking it for enhanced allocation of money.

The request is to be made in the revised budgetary estimates to be presented in the second half of the ongoing fiscal (after September 30). Duties vary between 18 and 28 per cent, depending on what is being imported. The MoD has capital acquisition budget of Rs 93,982 crore for the ongoing fiscal.

Also the MoD, since March this year has started incorporating “payment of customs and excise duty by suppliers” as part of future contracts.

The move is all the more significant as in the past three years, the nine defence public sector undertakings (DPSU) and over 20 other units like Ordnance factories—all under the MoD—do not enjoy duty exemption. This was done to give “level playing field” to international and Indian military equipment makers who have to pay duties on imports.

Customs duty on import of military equipment was imposed in 2016. The request for seeking more money will be even more important as the nine DPSU and other Ordnance factories import parts from Russia for BrahMos missile, Sukhoi jets, T-90 tanks and warships. They also import engines from the US (for Tejas). Some parts of long-range missiles and avionics come from Israel; specialised heavy-duty truck is imported from a European country. And this is just the proverbial tip of the iceberg. The exact quantum of duties is being worked out for each DPSU.