By Shivam Patel
NEW DELHI (Reuters) – India on Saturday proposed defence spending of 6.81 trillion rupees ($78.70 billion) for the 2025-26 fiscal year, up 9.5% from the previous year’s initial estimates, with most eaten up by wages and pensions rather than acquiring new weapons.
The 4.7 trillion rupees the budget allocated for manpower costs dwarfed its proposed capital outlay of 1.80 trillion rupees, focused on modernisation and defence procurement.
The capital outlay figure was 4.6% more than the previous year, but analysts said it needed to be higher still to meet India’s efforts to modernise its military to counter rival China.
Main allocations in terms of outlay were 486 billion rupees for aircraft and aero engines, and 243.9 billion rupees for the naval fleet – two key areas where India is seeking to enhance its capabilities.
“This has been a concern for a long time, that pensions (and) salaries put together… consume the major chunk of the defence budget, which continues to be the case,” Amit Cowshish, former financial adviser for acquisitions at the Defence Ministry, said.
Even with higher spending, the slow speed at which defence deals can be procured is hampering efforts to build up India’s military, analysts said.
The country is yet to spend 125 billion rupees from the defence budget for the current fiscal year that ends on March 31, something that Indian analysts said showcased the nature of defence deals in general, which involve lengthy negotiations.
“Even if we allocate more to capital outlay… I am pretty sure that this amount can’t really be spent,” said Cowshish.
India employs more than 1.47 million active troops in its armed forces, and its defence budget in 2023 was the fourth largest in the world behind the U.S., China and Russia.
“With a very marginal increase in the capital expenditure, the modernisation will not pick up pace,” said Laxman Behera, a defence expert at government-funded Jawaharlal Nehru University in New Delhi.
“Of course, the government can revise these numbers later… they can go ahead and sign new deals, but the deals should be on the table and there is no such deal,” Behera added.
Speaking to Prime Minister Narendra Modi this week, U.S. President Donald Trump stressed on the importance of India buying more American-made security equipment. However, analysts do not expect any fresh deals to be signed immediately.
($1 = 86.5360 Indian rupees)
(Reporting by Shivam Patel in New Delhi; Editing by Jan Harvey)
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