India is poised for a major surge in military expenditure, with the Ministry of Defence preparing to seek a substantial increase in its budget for the next fiscal year. Defence Secretary RK Singh announced that the government may push for a 20% hike in defence spending for FY27, far above the average annual increase of 10%.
If cleared, this would translate into an additional $15.2 billion, marking one of India’s steepest annual jumps in defence allocations, driven by intensifying security challenges and an increasingly unpredictable neighbourhood.
In pursuance of the Centre’s ‘Viksit Bharat @ 2047’ vision, the Union Budget 2025-26 made a provision of Rs 6,81,210.27 crore for FY26 for the Ministry of Defence (MoD). This allocation was 9.53% more than the Budgetary Estimate of FY25 and stood at 13.45% of Union Budget, which is highest among the Ministries.
Defence budget hike: How does the global environment shape our priorities?
This move mirrors a wider global trend where militaries across major powers are significantly expanding their budgets amid rising geopolitical uncertainties. For India, the immediate triggers include regional tensions, expanding adversarial capabilities, and the strategic recalibration following Operation Sindoor, which highlighted the need for rapid force modernisation.
Defence Secretary Singh noted that the ministry gets a 10% budget increase on average every year. However, given the current geopolitical scenario and the uncertain neighbourhood, a special hike will be requested, especially in the aftermath of Operation Sindoor.
Aatmanirbharta: Becoming the centrepiece of defence modernisation?
A defining feature of the proposed hike is its deep link to India’s push for Aatmanirbhar Bharat in defence manufacturing. Singh emphasised that most of the capital allocation will go towards procurement from domestic companies, reinforcing the government’s commitment to cutting import dependence and boosting homegrown capabilities.
This aligns with ongoing trends. In the current fiscal, 75% of the modernisation budget was designated for domestic procurement, while actual procurement from Indian firms has already exceeded expectations, reaching nearly 88%.
Singh stressed that India was diversifying its defence purchases from abroad but the focus was on ensuring that the bulk of the budget is spent within the country. “Foreign OEMs [original equipment manufacturers] must get used to the fact that most of our money will be spent within the country, and if they want a share of that, they will have to look at co-producing weapons and systems with Indian firms.”
Why is India pushing for faster deliveries and stronger supply chains?
Alongside the spending boost, the government is also tightening accountability. Singh issued a clear warning to arms suppliers, both domestic and foreign, stating that delays in delivery will invite penalties or even termination of contracts. This signals India’s intent to not only spend more, but to demand performance, ensure timely induction of critical systems, and maintain momentum in its defence readiness cycle.
If maintained over several years, as Singh suggested, a 20% annual expansion could dramatically reshape India’s defence posture. It would accelerate acquisition of standoff weapons, deployment of next-gen air defence systems, expansion of advanced drone capabilities, faster modernisation across the Army, Navy, and Air Force, and the rise of India’s domestic defence ecosystem as a global player.