In her eighth consecutive budget presentation, Finance Minister Nirmala Sitharaman allocated ₹6.81 lakh crore for defence in the financial year 2025, a modest rise from the ₹6.21 lakh crore announced in the first full budget of the third Modi government last July.
The budget underscores India's commitment to boosting indigenous production and achieving self-reliance in the defence sector.
A significant portion of the allocation, ₹1.92 lakh crore, has been earmarked for capital expenditure, while ₹4.88 lakh crore is designated for revenue expenditure, which includes ₹1.60 lakh crore for defence pensions.
Capital expenditure provisions include ₹48,614 crore for aircraft and aero engines, ₹24,390 crore for naval fleet development, and ₹63,099 crore for other equipment.
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In 2024, India recorded its highest-ever defence production value at ₹1.26 lakh crore, while exports touched ₹21,083 crore, marking a significant stride towards self-reliance.
Sitharaman’s budget speech highlighted the government's continued efforts to strengthen domestic manufacturing through the 'Make in India' initiative.
Despite these achievements, experts have raised concerns over the limited share of capital expenditure at just 27.66 per cent of the overall defence budget.
This imbalance has prompted calls for increased investment in research and development (R&D).
Velina Tchakarova, a geopolitical strategist and founder of FACE, remarked, “India allocates just 1% of its defence expenditure to R&D, compared to 13% by the U.S. This limits advancements in critical areas like hypersonic weapons, AI, and quantum technologies.”
Efforts to bolster indigenous capabilities were highlighted by the launch of the TATA Aircraft Complex and the induction of platforms such as the light tank 'Zorawar.'
However, analysts emphasise the need for India to adopt a more agile approach to defence R&D to stay competitive in the evolving global landscape.
Beyond defence, the Union Budget included significant measures for the middle class, agriculture, and rural development.
Sitharaman announced a tax exemption for annual incomes up to ₹12 lakh and introduced six new schemes aimed at tackling unemployment and boosting crop productivity.
As India faces the challenges of modern warfare, this budget signifies a continued push towards innovation and indigenous production, while experts urge greater attention to R&D investment for long-term strategic competitiveness.
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