Defense spending, at 1.9% of GDP, is still less than the 2.5–3% that experts advise in order to counter the combined dangers posed by China and Pakistan. In contrast, China’s annual defense budget is about 1.6 times that of India.
With manpower-related costs (wages, pensions, and operating costs) accounting for 68.5% of the ₹6.81 lakh crore allocation, India’s 2025–2026 defense budget exhibits a continuing structural imbalance and leaves little money for modernization. This coincides with demands for more funding to combat China’s military buildup and solve urgent equipment shortages.
Notwithstanding the Agniveer program, which aims to lower long-term pension liabilities, legacy pension payments still account for 23.5% of the overall budget.
3. Delays in Procurement:
Due to bureaucratic delays, ₹12,500 crore of the capital budget for 2024–25 remained unspent, exposing structural inefficiencies. There are still severe deficits in nightfighting capabilities, air defense systems, and submarines.
Expert Opinions
Former MoD Financial Advisor Amit Cowshish: