Here are the top 10 points of this big move:
Announcing the move, Defence Minister Rajnath Singh said it was a "historic" decision. The chiefs of all the three services -- Army, Navy and Air Force -- were present for the launch.
Under the scheme, about 45,000 people between the age of 17.5 years and 21 years will be inducted into the services for a four-year tenure. The recruitments will begin within the next 90 days and the first batch will be ready by July 2023.
Those selected for the scheme will be known as Agniveers. The selection will be made through an online centralised system, the government said. Educational qualification for Agniveers will be the same as the criteria for regular positions in the force.
Women will also be inducted under the Agnipath scheme, Navy chief Admiral R Hari Kumar said. Army Chief General Manoj Pande said Agniveers will be fully assimilated and integrated into the services.
This four-year tenure will include a six-month training. During this period, they will be paid a monthly salary between Rs 30,000-40,000 plus allowances. They will also be entitled to medical and insurance benefits.
After four years, only 25 per cent of these soldiers will be retained and they will join the regular cadre and go on to serve for a full 15 years in non-officer ranks.
The remaining will exit the services with a package between Rs 11 lakh - Rs 12 lakh, but they will not be eligible for pension benefits. The forces announced that provisions have been made for loss of life or disability due to an injury on duty.
The scheme, if successful, will drastically cut the annual revenue and pension bill which accounts for half of the annual defence budget of Rs 5.2 lakh crore.
The government says the scheme will enhance the "youthful profile" of the forces and also bring about a transformational shift towards a more tech-savvy combat force.
The scheme has drawn criticism from some quarters, with critics arguing that it will impact the fighting spirit and professionalism of forces. They have raised concerns that the four-year tenure may make soldiers risk-averse.
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