India's defence sector needs replacement of outdated equipment with modern weaponry, according to experts. Defence expert Ajai Shukla believes the government's capital allocation in defence should increase by at least one third from the current Rs 1 lakh crore to about Rs 1.3 lakh crore. Major General Ashwani Siwach (retired), former head of Territorial Army, said the sector needs a big boost in terms of equipment, such as modern main battle tanks, armed drones and light machine guns for infantry.

Experts believe the defence industry is looking for a signal that the Defence Ministry is serious about catalysing the development of new indigenous technology. In order to do this, Mr Shukla feels an allocation of Rs 10,000 crore to the technology development fund is "crucial".

While some members of the industry have muted expectations as they feel priorities have shifted towards infrastructure development and social sector spending, others believe given the fact that national security is a key agenda for the re-elected National Democratic Alliance (NDA) government, the sector could witness a structural change on July 5, 2019.

"There should at least be a 15-20 per cent hike in the defence budget compared to last year' as the sector is in urgent need of modernisation," said Major General Siwach.

However, Mr Shukla said he believes the sector must get a "roll-on budget" suggesting that unspent money each year will get carried forward to the next year's budget instead of lapsing at the end of the financial year.