India’s Defence Spending

India’s defence spending  for the financial year 2025-26 is expected to stabilise around 1.9 to 2 per cent of GDP, consistent with recent years. While this offers financial stability, ANI writes  it may not be enough to counter escalating external threats.

At the 21st Subroto Mukerjee Seminar, Defence Secretary Rajesh Kumar Singh  highlighted the importance of prioritising resource allocation rather than increasing funds, noting that the current budget already stretches the absorptive capacity of domestic industries.

India’s absolute spending trails behind the US, China: Geopolitical strategist and FACE founder Velina Tchakarova remarked, “India’s defence budget at 2.4% of GDP (approximately $72.6 billion) positions it as the fourth-largest military spender globally, but its absolute spending significantly trails behind the U.S. ($916 billion), China ($296 billion), and the newly planned Russian defence budget for 2025 ($126 billion). This gap partially restricts India's ability to project power both regionally and globally, as sustained investments in advanced technologies, naval capabilities, and air power are critical for power projection. For instance, China’s rapid military expansion, including its robust naval fleet and artificial intelligence-based warfare systems, allows it to exert dominance in the Indo-Pacific—a region where India also seeks influence.”

Tchakarova added, “India’s plans, such as acquiring 114 multirole fighter jets and strengthening its naval capabilities with indigenous aircraft carriers like INS Vikrant, highlight its intent to enhance strategic reach, but budget constraints slow this progress.”

Total budget has been declining steadily

ANI notes India's defence spending as a share of the total budget has been declining steadily. From 16 per cent in 2013, it peaked at 18 per cent in 2016-17 but is projected to drop to 13 per cent by 2025 - the lowest since the 1960s. While this indicates fiscal prudence, it strains the country’s ability to counter external threats effectively.

In FY25, only 27.66 per cent of the defence budget has been allocated to capital expenditure. Dr Amit Singh, Assistant Professor at Jawaharlal Nehru University, observed that if all salaries and pensions had not been absorbed into revenue expenditure, more funds could have been allocated for modernisation. This places additional strain on finances while attempting to provide the most modern technologies for the armed forces. “If personnel costs were contained, more funds could be directed toward acquiring cutting-edge technologies,” he explained.

“While India's current spending aims to counter these threats, the allocation prioritises personnel costs over modernisation, with nearly 60% of the budget devoted to salaries and pensions. Modernisation efforts, such as acquiring the S-400 Triumf missile defence system from Russia or the Rafale jets from France, have been effective but require sustained investment. To address these risks adequately, India may need to realign spending towards high-tech capabilities like cyber warfare, space security, and autonomous systems,” added Velina Tchakarova.

Indigenous procurement

Domestic procurement has become a cornerstone of India’s defence strategy. In FY25, Rs 1.72 trillion (approximately $21 billion) was allocated for capital expenditure, with 75 per cent earmarked for domestic purchases. While this promotes local industry and strategic autonomy, inefficiencies and bureaucratic delays could hinder progress.

Puneet Kaura, Managing Director and CEO of Samtel Avionics Ltd, pointed out, "While self-reliance is of paramount importance, India needs to ensure that indigenous manufacturing capabilities are on par with the best in the world to stay ahead of the curve."

Strengthening strategic partnerships

India has fostered key defence partnerships with the U.S., Russia, France, and Israel, enabling technology transfer and co-development. Notable examples include:

• USA: The acquisition of P-8I maritime patrol aircraft and MH-60R Seahawk helicopters bolsters India’s naval strength. Joint production initiatives, like GE’s jet engine technology transfer, emphasize technology sharing.
• Russia: The BrahMos missile project and the lease of nuclear submarines demonstrate deep technological and strategic cooperation.
• France: The Rafale jets have enhanced India’s air combat capabilities, with agreements for Make-in-India components showing progress in domestic manufacturing.
• Israel: Systems like the Barak-8 air defence missile system and UAVs underscore effective technology transfer and co-development.

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