It is believed that the foreign policy of a country is as strong as its defense system. A country with a strong army and security capability can pursue its interests on the international stage without any pressure. This is the reason why today almost all the big countries of the world are spending heavily on their defense budget. The US has proposed increasing its defense budget to $1.5 trillion for the year 2027, which is about 50 percent more than previous estimates. Meanwhile, India’s neighbor China is also continuously increasing its military expenditure. In fiscal year 2025–26, China spent about $245 billion on its defense budget.
India’s defense expenditure: position in relation to GDP
If we look at the trend of India’s defense expenditure in the last 15 years, there has been a continuous decline in its ratio to GDP. In 2010–11, defense expenditure was 2.71% of GDP.
In 2015-16, it was 2.41%
In 2020-21, 2.88%
In 2022-23, 2.21%
In 2023-24, 1.97%
In 2024-25, 1.89%
In 2025-26, it will come down to around 1.90%. These figures clearly show that despite increasing global tensions, India’s defense expenditure is becoming limited in proportion to its GDP.
Financial year Percentage of GDP spent on budget
2015-16 | 2.41
2020-21 | 2.88
2022-23 | 2.21
2023-24 | 1.97
2024-25 | 1.89
Increasing global tension and India’s strategy
Today, the global situation is very unstable. The Iran, Venezuela, Ukraine wars and ongoing tensions in the Middle East have deepened the security challenges. This raises the question: What strategy should India adopt with respect to defense spending in Budget 2026? Economic expert Manish Kumar Gupta says that investment in defense sector is no longer limited to just GDP, employment or trade. It has become a direct measure of India’s strategic power and global influence. When India exports defense equipment, it is not just selling arms; He is making his place among the powerful countries of the world. A strong defense exporting country is taken more seriously in international forums.
Defense sector and economic development
According to Manish Gupta, the confidence expressed by IMF and World Bank regarding India’s growth rate is also largely related to the defense sector. Defense is a high-value manufacturing sector that integrates technology, MSMEs and skill development. This reduces imports, increases exports and has a positive impact on the current account balance. At present, the defense sector contributes about 2 percent to the GDP, which can be increased to 2.5 percent with the right policies.
Necessary reforms and challenges
However, for this it is necessary to take some tough decisions.
Transparency in defense procurement process
Ban on lobbying and repeated cancellation in tender system
Increasing the share of indigenous products in military procurement to 75 percent
Providing affordable credit and timely payments to MSMEs
Without these reforms, the vision of a self-reliant defense industry will remain incomplete.
The nature of war has changed
Manish Gupta says that today’s war is less about cannons and bullets and more about data, artificial intelligence and cyber technology. Therefore, the Budget 2026 should give special emphasis to AI, cyber security and cutting-edge technology.
Although defense exports have increased manifold and are targeted to reach ₹50,000 crore, there is still a huge gap between announcements and implementation at the ground level. It is important to focus on air force and basic industries
Defense expert and retired Wing Commander Praful Bakshi believes that India needs to focus most on its Air Force, because the Air Force plays the most important role in starting and shaping modern warfare. According to him, it is absolutely necessary to increase investment in research and development. Praful Bakshi also says that India’s biggest weakness is its basic industrial capacity. Unless the national industry is strong, the defense industry also cannot be strong. Today, India cannot produce many critical items itself, such as metal-grade engines. If we depend on other countries for weapons in times of war, we will not be able to continue the conflict for a long time. Therefore, it is very important to strengthen indigenous industry and manufacturing for long-term security.
