The Indian Defence Budget for the fiscal year 2025-26 has been set at a substantial ₹6,81,210 crore, reflecting a notable year-on-year increase of 9.53%. This budget constitutes 13.45% of the total Union Budget, marking it as the highest allocation among all ministries. However, a concerning aspect is the marginal increase of 4.65% in capital allocation for new procurements, raising questions about the pace of modernization in the defense sector amidst ongoing inflation and currency fluctuations.
Breakdown of the Defence Budget 2025-26
The budget is categorized into various allocations, including:
- Revenue Expenditure: ₹3,11,732.30 crore
- Capital Expenditure: ₹1,80,000 crore
- Defence Pensions: ₹1,60,000 crore
- Civil Expenditure: ₹28,682.97 crore
Key Highlights of the Defence Budget 2025
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Modernization and Capital Expenditure
The government has earmarked ₹1.80 lakh crore for capital expenditure, with ₹1,48,722.80 crore designated for capital acquisition and the modernization of the armed forces. Moreover, ₹31,277.20 crore will focus on Research & Development (R&D) and infrastructure development. Notably, ₹1.12 lakh crore has been allocated for procurement from domestic industries, in alignment with the Atmanirbhar Bharat (Self-Reliant India) initiative.
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Delayed Defence Procurement and Upcoming Deals
Despite increased allocations, a projected ₹12,500 crore is anticipated to be returned from the previous year’s estimates, indicative of the slow pace of defense procurement. Nevertheless, several significant deals are expected before the end of the fiscal year, including the acquisition of 26 Rafale-M fighter jets, which are intended for aircraft carriers, and three Scorpene-class submarines, with a combined estimated cost around $10 billion. Moreover, the Army is set to procure 307 Advanced Towed Artillery Gun Systems (ATAGS) valued at approximately ₹8,000 crore.
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Major Boost for Indian Coast Guard (ICG)
The Indian Coast Guard has been granted a 26.5% increase in total allocation and a 43% rise in its capital budget, both targeting the enhancement of coastal security and emergency response capabilities. The capital budget increase, from ₹3,500 crore to ₹5,000 crore, will fund the acquisition of Advanced Light Helicopters (ALH), Dornier aircraft, fast patrol vessels, training ships, and interceptor boats.
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Defence Pensions and Welfare Measures
In a move to ensure financial stability for ex-servicemen and their families, defence pensions are set to rise by 13.87%, reaching ₹1.6 lakh crore. Furthermore, the Ex-Servicemen Contributory Health Scheme (ECHS) has been allocated ₹8,317 crore, reflecting a 19.38% increase from the previous year. The One Rank One Pension (OROP) scheme, which has been in effect since July 2014 and revised every five years, is scheduled for its third revision in July 2024.
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Infrastructure Development: Border Roads Organisation (BRO)
The Border Roads Organisation has received a capital allocation of ₹7,146 crore, indicating a 9.74% increase from 2024-25. These funds are earmarked for strategic infrastructure projects, including roadways in Arunachal Pradesh, Jammu & Kashmir, and Rajasthan. Additionally, BRO has reportedly employed around 70,000 local youths, contributing positively to regional economic development.
Conclusion
While the Indian Defence Budget for 2025 reveals an overall increase, the relatively small rise in capital allocations raises concerns about modernization efforts. Nonetheless, the significant boosts for defence pensions, the expansion of the ICG, and infrastructure development underscore the government’s commitment to both security and welfare. Addressing procurement delays and ensuring efficient fund utilization will be pivotal in maintaining India’s military preparedness and strategic dominance.
With major defense deals on the horizon and a clear push for domestic manufacturing, the budget is aligned with India’s long-term defense and security objectives, although challenges related to execution and timely implementation remain.
