Army's Vice Chief Lt Gen Sarath Chand has told the panel of lawmakers that the Army had identified 25 projects for Make in India as part of its modernisation plan but many of these may have to be scrapped because "there is not adequate Budget to support this".
"As far as we are concerned, the state today is 68 per cent of our equipment is in the vintage category, with just about 24 per cent in the current, and eight per cent in the state of the art category," he said.
Army officers say the proportion of equipment that can be classified as vintage should not exceed one-third.
"The Budget of 2018-19 has dashed our hopes and most of what had been achieved has actually received a little set back," the top Army officer told the panel.
In this year's budget, Finance Minister Arun Jaitley earmarked Rs 21,338 crore for the army's modernisation. The Army had asked for 37,000 crore.
The Army officer said this allocation was insufficient to cater for committed payment of Rs 29,000 crore on 125 on-going schemes and would hardly leave any funds for new schemes.
One of the casualties could be the Future Ready Combat Vehicles that the army had been hoping would form the base of its main battle tanks and replace the existing tanks such as the T-72 tanks that have been service since the 1980s.
But the funds shortage could delay such plans by a few years. "I am not sure what is going to be their future," Vice Chief Lieutenant General Sarath Chand told the committee.
The Army told the parliamentary committee that "the possibility of two-front war is a reality" and "it is important that... we pay attention to our modernisation and filling up our deficiencies".
''We have a large number of Chinese strategic roads and also infrastructural development along the northern borders. For these infrastructure development, the allocation is falling short by around Rs. 902 Crore from what we have demanded. So, there is an overall shortfall of around Rs. 12,296 Crore as far as capital is concerned," Lt Gen Chand said.