By : Vansh Vijay Aggarwal

Introduction

India’s defence budget for 2024-25 reflects a strategic push toward modernization, self-reliance, and enhanced military preparedness. With an allocation of ₹6.21 lakh crore (approx. $75 billion), the budget sees a 4.72% increase from the previous year, emphasizing capital acquisitions, domestic defence production, and infrastructure development. While a significant portion is dedicated to personnel costs, efforts are being made to balance manpower expenses with technological advancements. The government’s focus on indigenous manufacturing under Aatmanirbhar Bharat and increased investments in defence R&D signal a shift towards reducing reliance on imports. However, challenges remain in optimizing resource allocation, upgrading border infrastructure, and strengthening cybersecurity. This article explores India’s defence spending trends, compares its global standing, and highlights key areas where budgetary adjustments are necessary to enhance national security and operational efficiency.

Overview of India’s Defense Budget 2024-25

The Union Budget 2024-25 allocates ₹6.21 lakh crore (approx. $75 billion) to the Ministry of Defence, a 4.72% increase from the previous year. Of this, ₹1.72 lakh crore (27.67%) is earmarked for capital acquisitions, including advanced weaponry, aircraft, and submarines. Revenue expenditure stands at ₹92,088 crore (14.82%), covering operational costs like maintenance and infrastructure. Personnel pay and allowances account for ₹1.90 lakh crore (30.66%).

Under the Aatmanirbhar Bharat initiative, 75% of the modernization budget (₹1.05 lakh crore) is reserved for domestic procurement. The Defence Research and Development Organisation (DRDO) receives ₹23,855 crore to boost indigenous technology. The iDEX initiative sees a rise in funding to ₹518 crore, supporting defence start-ups. Infrastructure development is a priority, with ₹6,500 crore allocated to the Border Roads Organisation (BRO), a 30% hike. The Indian Coast Guard receives ₹7,651.80 crore, enhancing maritime security. These investments highlight India’s focus on modernisation, self-reliance, and strategic defence readiness.

How India Stands Among Major Defense Spenders

​In 2023, India allocated $83.6 billion to defence, ranking as the fourth-largest global spender. This expenditure constituted 2.4% of India’s GDP. In comparison, the United States led with $916 billion (3.4% of GDP), followed by China at $296 billion (1.7% of GDP), and Russia at $109 billion (5.9% of GDP). Neighbouring Pakistan’s defence spending was significantly lower, at $8.5 billion. ​ Globally, military expenditures vary, with countries like Saudi Arabia allocating 7.1% of GDP to defence, while Japan spends 1.2%. India’s 2.4% allocation reflects its strategic priorities and regional security concerns.​

A significant portion of India’s defence budget is dedicated to personnel costs, including salaries and pensions, leaving approximately 22% for capital outlays aimed at modernization. In contrast, nations like the U.S. and China allocate substantial funds toward research, development, and procurement of advanced technologies. To enhance its defence capabilities, India could consider increasing investment in modernization and streamlining procurement processes, drawing lessons from these countries’ approaches.​

Key Areas Where India Needs to Make Changes in Defense Budget Allocation

India’s defence budget reflects a complex balancing act between sustaining a large personnel base and advancing military modernisation.​

1. Overdependence on Pensions & Salaries

A substantial portion of India’s defence expenditure is dedicated to personnel costs. In the 2025-26 fiscal year, out of the proposed ₹6.81 trillion (approximately $78.70 billion) defence budget, ₹4.7 trillion is allocated for wages and pensions, leaving only ₹1.80 trillion for modernisation and procurement of new weapons. This allocation structure has raised concerns about the adequacy of funds for capital outlay needed to effectively counter strategic challenges. ​To address this imbalance, a gradual transition towards a leaner, technology-driven force is essential. By investing in advanced technologies and reducing reliance on a large manpower base, India can enhance operational efficiency and allocate more resources toward modernisation efforts.​

2. Modernisation & Indigenous Defense Production

India’s pursuit of self-reliance in defence manufacturing faces several challenges. The indigenous development of military jet engines, such as the Kaveri project, has encountered performance issues, leading to continued dependence on foreign technology. Efforts to revive this initiative through partnerships with Western firms like General Electric, Rolls-Royce, and Safran are underway, aiming to co-develop advanced engines within India. ​Increasing investment in research and development (R&D) is crucial to overcome technological bottlenecks. Strengthening initiatives like ‘Make in India’ and ‘Aatmanirbhar Bharat‘ can foster indigenous production capabilities, reduce import reliance, and promote collaboration between the Defense Research and Development Organisation (DRDO), Hindustan Aeronautics Limited (HAL), and the private sector.​

3. Upgrading Infrastructure Along Borders

Developing robust infrastructure in sensitive regions like Ladakh and Arunachal Pradesh is vital for strategic mobility and defence preparedness. Enhanced budgetary focus on constructing roads, airstrips, and surveillance systems can improve troop deployment and logistics. Similarly, investing in maritime security and expanding naval capabilities are essential to safeguard India’s extensive coastline and maritime interests.​

4. Cybersecurity & Emerging Threats

The increasing prevalence of cyber threats necessitates a comprehensive cyber-defence strategy. Investing in artificial intelligence-driven defence technologies, space security, and unmanned systems like drones can bolster India’s preparedness against emerging challenges. Learning from the cyber warfare strategies of developed nations can provide valuable insights into building resilient cyber infrastructure and defence mechanisms.​

5. Enhancing Private Sector & FDI in Defence

Integrating the private sector into military aircraft manufacturing can strengthen the defence industrial base. A recent recommendation by an Indian defence committee advocates for increased private sector involvement to address the Indian Air Force’s declining squadron strength and delayed fighter deliveries. This approach aims to reduce the burden on state-owned enterprises like HAL and accelerate defence production. ​Policy reforms to encourage private participation and foreign direct investment (FDI) are necessary to create a conducive environment for global defence companies. Aligning India’s defence procurement policies with international standards can attract investment, facilitate technology transfer, and enhance domestic manufacturing capabilities.​

Analysis of Necessary Changes in Budget Allocation

​India’s defence budget for the fiscal year 2025-26 stands at ₹6.81 lakh crore (approximately $78.70 billion), with a significant portion allocated to manpower costs, including salaries and pensions. Specifically, ₹4.7 trillion is dedicated to these expenses, leaving ₹1.80 trillion for modernisation and procurement. ​

1. Shift Focus from Salaries & Pensions to Modernisation

The substantial allocation towards salaries and pensions underscores the need for a strategic shift towards modernisation. Investing in artificial intelligence (AI), robotics, and autonomous weapon systems can enhance operational efficiency and reduce reliance on a human-intensive force. Implementing schemes like ‘Agnipath‘ aims to reduce long-term pension liabilities by recruiting soldiers on a short-term contractual basis, though it has faced criticism regarding its potential impact on combat readiness. ​

2. Increase R&D Funding for Indigenous Defense Production

The Defence Research and Development Organisation (DRDO) has received a budget allocation of ₹26,816.82 crore for FY 2025-26, marking a 12.41% increase from the previous fiscal year. Despite this rise, DRDO’s budget remains modest compared to global counterparts like the U.S. Defence Advanced Research Projects Agency (DARPA). Enhancing R&D funding is crucial to bolster domestic defence capabilities and reduce dependence on foreign technology. ​

3. Prioritize Border Infrastructure & Maritime Security

Investing in strategic infrastructure, such as roads and airstrips in border regions like Ladakh and Arunachal Pradesh, is vital for rapid troop deployment and maintaining territorial integrity. Additionally, enhancing naval capabilities is essential to secure India’s interests in the Indian Ocean Region. Allocating more funds towards maritime security will help counter emerging threats and assert India’s presence in critical sea lanes.​

4. Boost Cybersecurity & Space Warfare Investments

As warfare evolves, cyber and space domains have become pivotal. India must increase investments in cybersecurity measures, AI-driven defence technologies, and space security initiatives to protect against cyber threats and establish a robust presence in space. Learning from the cyber warfare strategies of developed nations can provide valuable insights into building resilient defence mechanisms.​

5. Encourage Private & FDI Participation in Defense Manufacturing

Integrating the private sector and attracting Foreign Direct Investment (FDI) is essential for strengthening India’s defence manufacturing ecosystem. Policy reforms aimed at expediting approvals for defence startups and providing incentives for private-sector innovation can enhance self-reliance in arms production. Collaborations with global defence companies can facilitate technology transfer and elevate domestic manufacturing standards.​ By implementing these strategic budgetary shifts, India can achieve a more balanced and modern defence posture, ensuring preparedness for contemporary and future security challenges.

Conclusion

India’s defence budget for 2024-25 reflects a crucial step toward modernisation, self-reliance, and strategic preparedness. While the government has made commendable efforts to boost indigenous manufacturing, strengthen border infrastructure, and invest in emerging technologies, significant challenges remain. The heavy reliance on personnel costs limits funds available for modernisation, making it imperative to adopt a leaner, technology-driven defence force. Increasing investment in R&D, cybersecurity, and private sector participation will be key to ensuring a robust and future-ready military. As geopolitical tensions evolve and security threats become more complex, the question remains—how can India strike the perfect balance between fiscal prudence and military modernisation to maintain its strategic edge in an increasingly volatile global landscape?

Author’s Bio:

Vansh Vijay Aggarwal is a B.A. LL.B. student at Jindal Global Law School and a columnist at CNES.

Image Source : Defence Ministry gets highest allocation in Union Budget 2024, Rajnath Singh reacts | India News – India TV