India’s Defence Budget 2025:Aiming for Modernisation and Self-Reliance (Editorial,March, 2025)

In recent years, India has focused on modernising its defence sector and achieving self-reliance. The 2025-26 defence budget, with a 9.5% increase from the previous year, reflects this priority, as Finance Minister Nirmala Sitharaman allocated the highest budget to the defence ministry.

This budget increase signals the government’s intent to strengthen the Indian military amidst evolving geopolitical and security challenges. The budget’s key focus areas include modernisation, driven by tensions with China along the Line of Actual Control (LAC) and ongoing border security issues with Pakistan, as well as self-reliance under the Atmanirbhar Bharat vision for domestic defence production.

India’s defence budget has seen steady growth, rising from ₹5.25 lakh crore in 2022-23 to ₹5.94 lakh crore in 2023-24, and now ₹6.22 lakh crore for 2024-25. This marks a 30% increase over three years. However, while the overall budget increased, the modernisation allocation saw only a 4.6% rise, a decline from previous years. The budget’s capital outlay of ₹1.8 lakh crore highlights a focus on infrastructure development, but it raises concerns over limited funds for modernisation efforts.

One of the budget’s major highlights is its push for domestic defence production. The government has earmarked 75% of capital procurement for local suppliers, signalling a strong commitment to reducing reliance on foreign arms imports. This move is expected to boost the private sector, foster research and development (R&D), and strengthen India’s defence manufacturing capabilities.

The revenue expenditure for operational costs has also increased, rising from ₹2.83 lakh crore to ₹3.11 lakh crore for 2024-25. This covers salaries, training, logistics, and maintenance costs. Additionally, defence pensions have surged to ₹1.6 lakh crore due to the One Rank One Pension (OROP) scheme and the growing number of retired personnel. The increasing pension costs raise concerns about resource allocation, as more funds may be needed for modernisation and self-reliance initiatives.

To foster innovation, the government has allocated ₹449.62 crore to the Innovations for Defence Excellence (iDEX) and Acing Development of Innovative Technologies (ADITI) programs. These initiatives aim to encourage defence innovation through startups. The Defence Research and Development Organisation (DRDO) also received a 12.4% budget increase, amounting to ₹26,816 crore, underscoring the importance of research and development in achieving India’s strategic goals.

In today’s defence landscape, where cyber warfare, artificial intelligence (AI), and space-based defence systems are becoming increasingly important, the rise in R&D funding is crucial. However, despite the increased allocation, India lags behind global leaders like China and the United States in defence technology, prompting concerns about whether the current budget is sufficient to bridge the technological gap.

Infrastructure development remains a top priority in the 2025-26 budget, with the Border Roads Organisation (BRO) receiving ₹7,146 crore. This allocation is intended to enhance military movement in high-altitude regions along the LAC and the Line of Control (LoC). The investment will improve connectivity to remote areas, enabling faster troop deployment and bolstering India’s defence posture. Additionally, it aims to address logistical challenges by constructing strategic roads, bridges, and tunnels in these regions.

The defence budget reflects India’s growing focus on military preparedness and indigenisation. By investing in border infrastructure, R&D, and domestic procurement, the government is aligning its budget with long-term security objectives, especially as China’s influence in the Indo-Pacific region expands. The shift towards cyber warfare, automated weapons, and space-based defence highlights India’s transition to a technology-driven military.

Despite positive developments, concerns remain about delayed procurement, with ₹12,500 crore left unspent last year, raising questions about the efficiency of fund utilisation. To ensure India remains on track toward achieving its security goals, the government will need to ensure efficient use of allocated funds and accelerate the adoption of advanced technologies.

In conclusion, the 2025-26 defence budget strikes a balance between modernisation, personnel welfare, and operational efficiency. The emphasis on self-reliance, private sector involvement, and investment in R&D are promising signs for India’s defence future. However, rising pension costs and modest capital outlay increases could pose challenges to India’s long-term vision. The government’s ability to manage resources effectively and embrace cutting-edge technologies will be key to strengthening India’s defence capabilities and ensuring regional stability. n