India increases its defence budget by almost 10%, but the lion's share goes to pensions and salaries
India's Ministry of Defence has announced a 9.53% increase in the defence budget for 2025-2026, due to security challenges on the borders with Pakistan and China.
Here's What We Know
The Ministry of Defence's budget will amount to a record 6.81 trillion rupees (USD 78.3 billion). At the same time, only 26.4% of the funds will be used for new procurement, as salaries and pensions account for a significant portion of the expenditure.
The government has called 2025-2026 a period of reform, emphasising the need to modernise the army. However, funding for arms purchases increased by only 4.65%. Priorities remain MQ-9B drones, deck-mounted fighters, submarines, and next-generation warships.
The government is focusing on self-sufficiency of the defence industry: 75% of the modernisation budget (1.12 trillion rupiah) is allocated for procurement from domestic producers, of which 25% is reserved for the private sector.
In addition, spending on defence research and development increased by 12.4%, reaching 268 billion rupees, which should strengthen cooperation between public and private companies in the field of new technologies. According to official figures, in FY2023-2024, domestic defence production rose to 1.27 trillion rupees, 174% more than a decade ago. This figure is expected to reach 3 trillion by 2029.
Defence exports also grew by 32.5% to Rs 19.4 billion, with the US, France and Armenia being the main buyers. By 2029, India plans to increase this figure to 500 billion rupees.
Source: Defence News
