NEW DELHI: In her seventh Union Budget presentation, Finance minister Nirmala Sitharaman announced a significant reduction in the defence budget, allocating Rs 4.54 lakh crore for FY25. This is a steep decrease from the Rs 6.21 lakh crore announced in the Interim Budget just five months earlier.
Sitharaman began her address by highlighting the government’s continued support from the public, stating, “The people of India have reposed their faith in the government led by PM Modi and re-elected it for a historic third term.” She emphasized India’s strong economic growth and stable inflation, which is moving towards the 4% target.The budget’s key focus areas are employment and the middle class, with a significant allocation of Rs 2 trillion ($24 billion) for job creation over the next five years.
In February, the defence sector allocation for FY24 was revised from Rs 5.94 lakh crore to Rs 6.24 lakh crore. The interim allocation of Rs 6.22 lakh crore for FY25, though slightly lower than FY24’s revised estimate, remained the highest among other ministries, constituting nearly 13% of the Central government’s overall budgeted expenditure. Despite this, the allocation remains below 2% of India’s GDP. Capital expenditure for acquiring new equipment and technology is set at Rs 1.72 trillion, representing 27.67% of the total defence budget.
Around 28% of the defence allocation, or Rs 1.72 lakh crore, is dedicated to capital acquisitions as per the Interim Budget announcement. The Armed Forces’ revenue expenditure (excluding salaries) is budgeted at Rs 92,088 crore, with defence pensions at Rs 1.41 lakh crore. Additionally, Rs 6,500 crore is allocated for strengthening border infrastructure, Rs 7,651.80 crore for the Indian Coast Guard, and Rs 23,855 crore for the Defence Research and Development Organisation (DRDO).
India’s annual defence production reached a record high of approximately Rs 1.27 lakh crore for 2023-24, surpassing previous milestones set by the Make in India programme. In comparison, the value of defence production for FY23 was Rs 1.09 lakh crore. As one of the largest importers of arms globally, India has been driving indigenisation efforts in recent decades. The Defence Ministry announced that over 12,300 items have been indigenized in the past three years, reflecting efforts to strengthen domestic defence industries.
Estimates suggest that the Indian armed forces will spend approximately $130 billion on capital procurement over the next five to six years. The government aims to reduce reliance on imported military equipment by boosting domestic defence manufacturing. The Defence Ministry has set a target of $25 billion, or Rs 1.75 lakh crore, in defence manufacturing turnover within the next five years. Defence Minister Rajnath Singh recently announced plans to raise military hardware exports from the current Rs 21,083 crore to Rs 50,000 crore by 2028-29.
Sitharaman began her address by highlighting the government’s continued support from the public, stating, “The people of India have reposed their faith in the government led by PM Modi and re-elected it for a historic third term.” She emphasized India’s strong economic growth and stable inflation, which is moving towards the 4% target.The budget’s key focus areas are employment and the middle class, with a significant allocation of Rs 2 trillion ($24 billion) for job creation over the next five years.
In February, the defence sector allocation for FY24 was revised from Rs 5.94 lakh crore to Rs 6.24 lakh crore. The interim allocation of Rs 6.22 lakh crore for FY25, though slightly lower than FY24’s revised estimate, remained the highest among other ministries, constituting nearly 13% of the Central government’s overall budgeted expenditure. Despite this, the allocation remains below 2% of India’s GDP. Capital expenditure for acquiring new equipment and technology is set at Rs 1.72 trillion, representing 27.67% of the total defence budget.
Around 28% of the defence allocation, or Rs 1.72 lakh crore, is dedicated to capital acquisitions as per the Interim Budget announcement. The Armed Forces’ revenue expenditure (excluding salaries) is budgeted at Rs 92,088 crore, with defence pensions at Rs 1.41 lakh crore. Additionally, Rs 6,500 crore is allocated for strengthening border infrastructure, Rs 7,651.80 crore for the Indian Coast Guard, and Rs 23,855 crore for the Defence Research and Development Organisation (DRDO).
India’s annual defence production reached a record high of approximately Rs 1.27 lakh crore for 2023-24, surpassing previous milestones set by the Make in India programme. In comparison, the value of defence production for FY23 was Rs 1.09 lakh crore. As one of the largest importers of arms globally, India has been driving indigenisation efforts in recent decades. The Defence Ministry announced that over 12,300 items have been indigenized in the past three years, reflecting efforts to strengthen domestic defence industries.
Estimates suggest that the Indian armed forces will spend approximately $130 billion on capital procurement over the next five to six years. The government aims to reduce reliance on imported military equipment by boosting domestic defence manufacturing. The Defence Ministry has set a target of $25 billion, or Rs 1.75 lakh crore, in defence manufacturing turnover within the next five years. Defence Minister Rajnath Singh recently announced plans to raise military hardware exports from the current Rs 21,083 crore to Rs 50,000 crore by 2028-29.
