Union budget 2025 defence: The allocation for the Ministry of Defence (MoD) in the Union Budget 2025-26 (FY26) is unlikely to see a significant increase, remaining between 1.9 and 2 percent of India’s GDP. Defence Secretary Rajesh Kumar Singh has suggested that even the current allocation is challenging to fully utilize, stating, “There’s adequate money available for what we want to do.”
Despite the stagnant budget, the government is emphasizing modernization and self-reliance under its ‘Aatmanirbharta’ initiative. According to Buisness Standard, Declaring 2025 as the “Year of Reforms,” the MoD aims to address critical gaps while keeping modernization efforts uncompromised.
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Experts like journalist Shekhar Gupta have advocated for gradually increasing defence spending to 2.5 percent of GDP over the next few years to counter strategic challenges posed by China and Pakistan.
Declining Defence Budget over the years
India’s defence budget as a percentage of GDP and the national budget has steadily declined. In 2013, defence spending accounted for 16 percent of the national budget, rising to 18 percent by 2016-17 under the Modi administration.
This figure has now dropped to just 13 percent of the national budget and 1.9 percent of GDP, marking its lowest point since the 1960s.
Defence Secretary Singh, addressing the Subroto Mukerjee Seminar, highlighted India’s growth towards a $4 trillion economy and dismissed concerns about resource constraints. He emphasized the need for better prioritization of solutions, explaining that limited domestic absorptive capacity makes it difficult to fully utilize even the current allocation.
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FY25 Budget Highlights for Defence
In the FY25 Union Budget, the MoD received Rs 6.22 trillion (around $75 billion), the highest allocation among ministries. The focus was on critical capability acquisitions, with Rs 1.72 trillion earmarked for capital expenditure a 20.33 percent increase from FY23’s actual expenditure.
Only 27.66 percent of the budget was allocated for modernization, while the remaining funds were divided among salaries, pensions, operational expenses, and other areas.
To strengthen domestic industries, 75 percent of the modernization budget (Rs 1.05 trillion) has been allocated for local procurement. This aligns with the government’s commitment to fostering self-reliance in defence production and reducing dependency on foreign imports.
