India’s Defence Spending: India’s defence budget has seen a significant increase in the last decade. In FY 2024-25, the budget reached Rs 6.22 lakh crore, compared to Rs 2.53 lakh crore in 2014, showing 2.5 times increase over ten years. Without including pensions, the budget allocation increased by 8.6% over the last year, while including pensions, the growth stands at 7.1%.
Facing adversaries in its northern borders, such as Pakistan’s hostility and China’s expansionist moves, along with ongoing geopolitical conflicts in the Middle East and between Russia and Ukraine, India needs to maintain this pace of defense spending.
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According to India TV, Capital expenditure saw a growth of about 15% in FY 2024-25, which is a positive sign. The focus of the last decade, and particularly last year’s budget, has been on modernizing the Armed Forces and acquiring new technologies. Capital expenditure in the 2024-25 budget was 34% of the total defense budget, which the government needs to increase to adapt to changing global geopolitical dynamics and to keep adversaries at bay. Last year’s budget allocation under the capital head for the Defense Forces was Rs 1.72 lakh crore.
According to a PwC report, last year’s budget, excluding pensions, was INR 4,80,736 crore, an 8.6% increase compared to the 2023-24 budget estimates. The total defense budget was Rs 6,21,941 crore, marking a 7.1% increase over last year’s budget estimate.
In a conversation with Moneycontrol, Prabhudas Lilladher’s Amit Anwani said, “All three services — Army, Navy, and Air Force — require significant modernisation, both in terms of equipment and manpower training”.
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India’s R&D budget, which is crucial due to the absence of critical technology, is likely to get a hike, currently standing at approximately Rs 13,200 crore. Another notable development over the past decade is the government’s focus on Aatmanirbharta (self-reliance) in defense technology and manufacturing. The Ministry of Defence had earmarked 75% of the modernization budget, amounting to Rs 1,05,518.43 crore, for procurement through domestic industries during the last financial year.
