India’s defence budget for 2025-26 has been increased by 9.53 percent, bringing the total allocation to Rs 6.81 lakh crore. While this steady expansion reinforces India’s commitment to military modernization, it remains far below the budgets of the United States ($849.8 billion) and China ($232-309 billion, estimated). The contrast underscores the strategic challenges India faces from maintaining deterrence against China and Pakistan to pursuing self-reliance in defence production amid global technological competition.
India’s Rs 6.81 lakh crore budget marks a substantial jump over the previous year’s allocation. This 9.53 percent increase is the sharpest in recent years, reflecting the government’s emphasis on border security, military modernization, and self-reliance in defence production. The capital expenditure component, which funds new acquisitions, has also seen a proportional rise, signaling continued investments in fighter jets, naval warships, and indigenous missile systems.
Despite this, India’s defence budget remains a fraction of what the US and China allocate:
The disparity highlights India’s need to optimize resources, prioritize indigenous innovation, and balance conventional and next-generation warfare investments.
Defence Spending as a Share of GDP
United States: ~3.2% of GDP
India: 1.9-2% of GDP (following the increase)
China: Officially ~1.5% (real figures could be higher)
While India’s military expenditure as a share of GDP is higher than China’s official figures, Beijing’s dual-use investments in civil-military technology, strategic infrastructure, and state-backed defence enterprises suggest that China’s real military funding is significantly higher than stated. Rs 1.9 lakh crore in capital expenditure for new acquisitions and technological upgrades; Border infrastructure expansion to counter China’s growing presence along the LAC; indigenous production under AatmaNirbhar Bharat, reducing dependency on foreign imports; strengthening naval capabilities in the Indo-Pacific, focusing on submarines, aircraft carriers, and UAVs; expanding missile capabilities, including the Agni and BrahMos series.
Despite the budgetary hike, India still faces a significant gap in funding compared to China and the US, requiring strategic prioritization and efficiency in defence spending.
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