New Delhi: India’s defence spending has seen a steady upward trend over the past five years, reflecting a sustained government focus on national security, modernisation, and military preparedness.
According to official estimates, defence expenditure has risen significantly from FY21 to FY26, underlining the continued priority given to strengthening India’s armed forces amid evolving geopolitical challenges.
The India defence spending trend shows not just increases in allocation but also a strategic shift toward capital expenditure and indigenous capability building.
Steady Rise India Defence Spending
Data from the last five fiscal years shows a clear trajectory of rising defence outlay:
- In FY21, India’s defence budget stood at approximately ₹4.85 lakh crore.
- By FY25 (Revised Estimates), this had climbed to around ₹6.41 lakh crore.
- For FY26 (Budget Estimates), the allocation is placed at ₹6.81 lakh crore.
This represents an increase of nearly ₹2 lakh crore in spending over five years, driven by rising border tensions and the need to modernise key defence capabilities.
Why India Defence Spending Is Growing — Strategic Security Pressures
Multiple geopolitical factors have pushed India to expand its defence budget:
- Border challenges with neighbouring countries
- Global conflicts reshaping military readiness
- Emphasis on technological upgrades in warfare
With rising global instability, India’s focus has shifted from basic defence expenditure to targeted investments in modern military hardware and future-ready capabilities.
Modernisation and Capital Outlays Gain Importance
One of the most notable shifts in India’s defence spending has been its growing share of capital expenditure — which funds procurement of equipment, weapons, technologies, and infrastructure.
Capital vs Revenue Expenditure
- In the FY25 budget, about ₹1.80 lakh crore (roughly 26% of total defence outlay) was earmarked for capital spend.
- Capital outlay supports investments such as fighter aircraft, advanced artillery systems, drones, and naval platforms — all key for modernising the armed forces.
Industry bodies like FICCI have urged that this share increase further in Budget 2026, saying that future warfare will be technology-driven, multi-domain, and information-centric.
Boosting Domestic Defence Industry and Atmanirbhar Bharat Goals
A major thrust of India’s defence fiscal strategy has been to build domestic defence manufacturing capability. Under the Atmanirbhar Bharat initiative, the government has:
- Encouraged purchases from Indian industries and private sector companies
- Pushed for higher indigenous production of defence systems
- Supported export growth of defence products
This is seen as a move toward reducing reliance on foreign suppliers and strengthening domestic industry foundations for long-term security needs.
Looking Ahead: Budget 2026 Expectations
Industry experts and policy analysts expect Budget 2026 to focus on:
1. Technology & Innovation
Greater allocations for R&D, especially in areas such as:
- Artificial Intelligence (AI)
- Unmanned Aerial Vehicles (UAVs)
- Cyber and space defence technologies
FICCI has proposed increased funding specifically for organisations like DRDO to scale up future-ready capabilities.
2. Defence Exports
India’s defence exports have shown strong growth in recent years and are expected to receive more policy support to meet ambitious targets set for 2028–29.
Read also: From Drones to Rafales: How Operation Sindoor Changed Indian Defence Spending Pattern
