India’s Defence Budget Proposal for 2025-26

By Shivam Patel

NEW DELHI (Reuters) – India proposed a defence spending of 6.81 trillion rupees ($78.70 billion) for the 2025-26 fiscal year, marking a 9.5% increase from last year’s estimates. A significant portion of this budget is allocated towards wages and pensions rather than the acquisition of new weapons.

Budget Breakdown

• The budget allocated 4.7 trillion rupees for manpower costs, overshadowing the proposed 1.80 trillion rupees for capital outlay aimed at modernisation and defence procurement.
• The capital outlay saw a 4.6% increase compared to the previous year, but analysts believe more funding is essential for India’s military modernisation to address challenges posed by rival China.

Key Allocations

• 486 billion rupees for aircraft and aero engines
• 243.9 billion rupees for the naval fleet

Amit Cowshish, a former financial adviser for acquisitions at the Defence Ministry, expressed concerns that salaries and pensions consume most of the defence budget.

Despite the increased spending, the slow procurement of defence deals hampers India’s military development. Analysts noted that 125 billion rupees from the current fiscal year’s budget remain unspent, highlighting the lengthy negotiations involved in defence contracts.

Cowshish remarked, “Even if we allocate more to capital outlay… this amount can’t really be spent.”

India has over 1.47 million active troops, with its 2023 defence budget ranking as the fourth largest globally, after the U.S., China, and Russia.

Laxman Behera, a defence expert at Jawaharlal Nehru University in New Delhi, stated that without a substantial increase in capital expenditure, military modernisation will not progress quickly.

Despite discussions between Prime Minister Narendra Modi and U.S. President Donald Trump regarding India purchasing more American-made security equipment, no immediate deals are anticipated.

($1 = 86.5360 Indian rupees)