Kamal Davar | Will 15% Increase In Defence Budget Give India More Bang For The Buck?

Never before since the end of the Second World War has the world been so badly fractured as now, especially since Donald Trump’s return to the White House in January 2025. That he, holding the most powerful office in the world, who should have been seriously working to uphold the global rules-based order, is doing just the opposite, has left most nations, including most long-term US allies, seriously worried. It is needless to say that some of his policies also impact India, in more ways than one, including in strategic matters. Overall, as the strategic and security environment worsens the world over, including in South Asia, India needs to factor in its security calculus the manifold existing challenges and the newer ones emerging. Our own Operation Sindoor involvement highlighted the nuances of a fragile and hostile geopolitical environment in our neighbourhood and the critical imperative of being operationally ready and better militarily prepared against our own adversaries at all times. Unquestionably, adequate resources thus have to be allocated for ensuring security preparedness — but are we doing it? India’s finance minister, Nirmala Sitharaman, in her record ninth consecutive Budget presentation, and the Narendra Modi government’s 13th Budget in the Lok Sabha on February 1, has allocated Rs 7.85 lakh crores for the defence budget in FY 2026-2027 — a satisfying 15 per cent jump from last year’s defence budget and which is two per cent of India’s GDP. Last year’s allocation was Rs 6.58 lakh crores for the defence ministry, which was around just 1.9 per cent of GDP. It may be noted that India’s defence spending currently accounts to around 14.5 per cent of the total Union Budget in 2026-27. Is the budget for this financial year adequate to ensure India’s overall security build-up to cater for the formidable two-front threat that India faces from its main adversaries — China and Pakistan — both individually and collectively? That deserves serious analysis. India’s parliamentary subcommittees have unanimously and consistently recommended that the nation’s defence budget be raised to three per cent of GDP is quite well known but has never been implemented by any government of any political hue. In analysing the adequacy or otherwise of the allocations for the forthcoming financial year, it will be worthwhile to take a sharp look at the immediate requirements of our armed forces. The Indian Air Force, according to reliable media reports, is now down to a mere 31 fighter squadrons, from its minimum operational requirement of at least 42 squadrons. As the IAF and the defence ministry grapples with the selection of which fighters to be procured from abroad and the establishment of the AMCA project, or expediting the induction of the later versions of the indigenous Tejas aircraft, the fact remains that we have to import at least a hundred fifth-generation aircraft with alacrity, for which adequate capital budgeting has to be earmarked. The same is true for the import or indigenous production of at least a dozen more advanced featured submarines for the Indian Navy, including some nuclear-powered heavy torpedo and perhaps a third aircraft-carrier too, apart from suitable replacements for its aging MiG-29 naval warplanes. Additional advanced Brahmos missiles, S-400 and S-500 air defence systems, drones and UAVs of multiple types also need to be inducted, apart from latest maritime reconnaissance aircraft, 155mm artillery guns and longer-range multi-barrel rocket launchers, attack helicopters and a plethora of other equipment and platforms, including upgrades of all types of weaponry across the three services. The armed forces also need to sharpen their capabilities for AI, quantum computing and cyber warfare, and begin working in the realm of space warfare. All these critical operational requirements would require very high investments from the government. Keeping India’s defence modernisation in mind, the finance minister has allocated around Rs 2.19 lakh crores as capital outlay for modernisation, which is a welcome 22 per cent increase from the last financial year. In addition, under the revenue expenditure head, which is the major and remaining portion of the Budget and caters for salaries, operations, maintenance and pensions, a provision for increased allocation for pensions too has been catered for. Importantly, the budget for R&D has been also increased to Rs 17,500 crores. In addition to the allocation of sufficient resources by the finance ministry, the ministry and the three services must ensure the optimal utilisation of funds by determinedly implementing measures which are well known, but somewhere their fruition gets into problems. There is no alternative to “atma nirbharata” (self-reliance), which should be given top priority. For this, unwavering assistance to India’s vibrant private sector and ensuring cooperation between them and the DRDO is essential. Leading foreign companies should be encouraged to set up joint production facilities in India for arms and equipment, not only for the Indian armed forces but even for export. The armed forces and other security forces should be directed to ascertain their requirements with clarity and not keep changing their qualitative requirements for the weapons, platform and equipment they want inducted. Importantly, the funds allocated for air defence, AI, UAVs and drones of various types must be fully utilised and not fall a prey to bureaucratic malaise. The procedures for procurement of various requirements in the arsenal must be streamlined, for which the armed forces cannot blame any institution but themselves. An eye on future criticalities must also be ensured. In all likelihood, 2026 will be a challenging year owing to the continuing volatility in our neighbourhood. It is thus imperative for all stakeholders in India to rise to the challenges ahead and ensure full utilisation of the resources allocated for India’s defence. Overall, the deteriorating geopolitical environment may warrant additional funding for our defence needs, which should also be given some thought now. The writer, a retired lieutenant-general, was the first head of India’s Defence Intelligence Agency, and is a strategic analyst



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