Defence Budgets Under Modi Government: The upcoming Budget 2025-26 will be the 11th budget presented by the Narendra Modi-led government since it returned to power for the third time in 2024. Among the many sectors that shape the Indian economy, the defence sector stands as one of the most vital. The government has continuously focused on modernising the military and promoting the production of defence equipment under the “Make in India” initiative.
Over the years, India has made remarkable progress in manufacturing its own defence equipment. This includes intercontinental ballistic missiles, surface-to-surface missiles, advanced missile defence systems, anti-tank guided missile systems, submarines, fighter jets, and helicopters.
These achievements have been made possible through significant investments in the Ministry of Defence, ensuring that the Indian Army, Air Force, and Navy are well-equipped to meet modern challenges.
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Defence Budget from 2014-15 to 2024-25 Under Modi government
The defence budget has consistently seen a rise under the Modi government, reflecting its commitment to strengthening India’s security. In the Budget 2024-25, the Ministry of Defence received ₹6,21,940.85 crore, the highest allocation among all ministries. This marked an increase of 18.43% over the 2022-23 budget and 4.79% over 2023-24.
In the FY 2023-24 Budget, the defence allocation stood at ₹5,93,537.64 crore, accounting for 13.18% of the total ₹45.03 lakh crore budget. Out of this, ₹1,38,205 crore was specifically set aside for defence pensions. Similarly, in 2022-23, ₹5.25 lakh crore was allocated to defence, including ₹1.19 lakh crore for pensions.
The 2020-21 budget allocated ₹3,37,553 crore for defence (excluding pensions) out of a total outlay of ₹30.42 lakh crore. An additional ₹1,33,825 crore was reserved for defence pensions. In 2019-20, the government allocated ₹3,18,931.22 crore for defence and ₹1,12,079.57 crore for pensions, bringing the total defence budget to ₹4,31,010.79 crore.
During 2018-19, the defence allocation was ₹2,95,511.41 crore out of a total budget of ₹24.42 lakh crore. The following year, in 2017-18, ₹3,59,854 crore (including pensions) was earmarked for defence spending.
The budget for 2016-17 was ₹3,89,614 crore, showing a modest increase from the previous year. In 2015, the government allocated ₹2,46,727 crore for defence, marking a 7.7% rise compared to the previous year. The first budget presented by the Modi government in 2014 allocated ₹2.29 trillion for defence, alongside a proposal to increase Foreign Direct Investment (FDI) in the defence sector to 49%.
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Budget 2025: What improvements can be done for defence this year?
The government could consider further increasing defence spending, which currently stands at 1.91% of GDP, reported by KPMG. Raising this to 3% could better meet the growing demands of the sector. This could include a targeted focus on capital spending to modernise equipment and infrastructure further.
To attract global manufacturers and make India a hub for defence production, policies like extending the technology transfer period from two years to ten years can be introduced. Simplifying entry barriers and offering region-specific incentives could also boost foreign investments in defence manufacturing.
Boosting indigenous production remains critical to reducing dependence on imports. Expanding public-private partnerships, increasing funding for schemes like the Production-Linked Incentive (PLI), and using AI-driven processes to reduce bureaucratic delays can strengthen local defence capabilities.
The budget should also focus on emerging technologies like Artificial Intelligence, advanced robotics, and cutting-edge electronics. Allocating at least 10% of the defence budget to research and development can pave the way for innovation and self-reliance in these areas.
Finally, strengthening partnerships with advanced nations through Free Trade Agreements (FTAs) can improve India’s access to critical components and advanced technologies. This will also help secure supply chains for clean energy and other crucial sectors linked to defence.
