India’s Defence Budget 2025-26: Key Allocations, Strategic Implications
Introduction
The Union Budget 2025-26 has allocated a record ₹6.81 lakh crore for the Ministry of Defence (MoD), marking a 9.53% increase from the previous year. This allocation underscores India’s commitment to modernizing its armed forces, enhancing domestic defense manufacturing, and bolstering strategic capabilities amid evolving geopolitical challenges. The defense budget stands at 13.45% of the total Union Budget, the highest among all ministries.
This article provides an in-depth analysis of the major components of the defense budget, its impact on modernization, domestic industry, border infrastructure, and future strategic implications.
Breakdown of the Defence Budget 2025-26
The total allocation is divided into four major categories:
- Capital Outlay: ₹1.80 lakh crore (26.43%)
- Revenue Expenditure: ₹3.11 lakh crore (45.76%)
- Defence Pension: ₹1.60 lakh crore (23.60%)
- Civil Expenditure: ₹28,682.97 crore (4.21%)
Capital Outlay and Modernization Initiatives
A major focus of the budget is capital outlay, which has seen a 4.65% increase from FY 2024-25, with ₹1.80 lakh crore dedicated to acquiring state-of-the-art weaponry and infrastructure.
- Modernization Budget: ₹1.48 lakh crore earmarked for the acquisition of advanced platforms such as remotely piloted aircraft, next-generation submarines, deck-based aircraft, and AI-driven defense systems.
- Domestic Procurement: ₹1.12 lakh crore (75% of the modernization budget) allocated for procurement from Indian industries, supporting Aatmanirbhar Bharat and fostering private sector participation.
- Emerging Technologies: Significant investments planned in cybersecurity, space warfare, artificial intelligence (AI), robotics, and machine learning, signaling India’s move towards technological dominance in warfare.
Revenue Expenditure and Operational Readiness
The ₹3.11 lakh crore revenue expenditure represents a 10.24% increase from FY 2024-25, ensuring operational readiness of the armed forces.
- Salary and Allowances: ₹1.97 lakh crore allocated for the salaries of service personnel, addressing pay revisions and additional recruitment needs.
- Sustenance Budget: ₹1.14 lakh crore designated for essential expenses like fuel, ammunition, maintenance, and logistics, with a focus on increasing flying hours and sea deployments.
Defence Pension and Welfare of Ex-Servicemen
A 14% hike in the defense pension budget to ₹1.61 lakh crore highlights the government’s commitment to ex-servicemen’s welfare.
- One Rank One Pension (OROP): The third revision of OROP, effective from July 2024, ensures that pension adjustments account for inflation and cost-of-living changes.
- Ex-Servicemen Contributory Health Scheme (ECHS): ₹8,317 crore allocated, marking a 19.38% increase, to enhance healthcare facilities for veterans and their families.
Boost to Defence Research & Development (R&D)
The Defence Research and Development Organisation (DRDO) receives a 12% hike, with ₹26,816.82 crore allocated to bolster indigenous technological advancements.
- Technology Development Fund: Increased funding for private sector collaboration through flagship initiatives such as iDEX (Innovations for Defence Excellence) and ADITI (Acing Development of Innovative Technologies with iDEX).
- Private Sector Integration: Strengthened partnerships with domestic firms to accelerate innovation in hypersonic weapons, directed energy weapons, and autonomous defense systems.
Strengthening Border Infrastructure and Indian Coast Guard
- Border Roads Organisation (BRO): ₹7,146 crore allocated to enhance roads, tunnels, and bridges in border regions like Arunachal Pradesh, Jammu & Kashmir, and Rajasthan, improving mobility and strategic reach.
- Indian Coast Guard (ICG): ₹9,676 crore (26.5% increase) for acquiring Advanced Light Helicopters, Dornier aircraft, and Fast Patrol Vessels to enhance maritime security and disaster response capabilities.
Strategic Implications of the 2025-26 Defence Budget
- Enhanced Self-Reliance: A strong push for domestic manufacturing will reduce dependency on imports and position India as a major defense exporter.
- Preparedness for Modern Warfare: Increased investment in AI, space security, and cyber warfare will future-proof India’s military against emerging threats.
- Geopolitical Considerations: Strengthened border infrastructure and higher operational budgets indicate a proactive stance in securing strategic locations against adversarial threats.
- Economic Growth: Defense manufacturing will have a multiplier effect on the economy by creating jobs, fostering innovation, and attracting foreign investments.
Why India Needs a $100 Billion Defense Budget
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Conclusion
India’s defense budget for 2025-26 reflects a balanced approach between modernization, self-reliance, operational readiness, and welfare. With a record-breaking allocation of ₹6.81 lakh crore, the government is taking significant strides towards building a technologically advanced and Aatmanirbhar military. The strategic focus on innovation, border security, and domestic defense manufacturing will shape India’s defense capabilities in the decades to come, aligning with the long-term vision of Viksit Bharat by 2047.
Source: https://pib.gov.in/PressReleasePage.aspx?PRID=2098485
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