Defence ministry to seek 20% budget hike in FY 26-27

THe defence ministry testament seek a 20% hike up in the defence budget for the financial twelvemonth 2026-27 to receive the growing requirements of the armed forces, factoring in the geopolitical realities, a top out official said on Friday.“We are in a particularly tough neighbourhood in many ways. So yes, we will be asking for a bit more than the normal 10% increase that we get, probably something closer to the 20% mark. My view is that we will have to keep it to the 20% level for the next few years. That will be sufficient to meet all of our capability [development] plans,” said defence secretary Rajesh Kumar Singh at a Federation of Indian Chambers of Commerce and Industry (FICCI) event.Speaking at an ANI event, Singh warned the defence industry that the government will foreclose contracts in the event of timelines not being met, in the context of emergency procurements where deliveries have to be completed within a year.India set aside more than ₹6.8 lakh crore for defence spending in the Union Budget for 2025-26, including ₹1.8 lakh crore for the modernisation of the military. It is around 9% higher than what it was in the budget estimates ( ₹6.23 lakh crore) for FY 2024-25.“I don’t see any difficulties in getting that kind of an allocation [20% more] from the finance ministry. Given the growing, diversified industrial base that this country has in the defence space, we have the absorptive capacity to utilise those additional resources that we are seeking,” Singh said at the FICCI event.The additional budget will be sought in the backdrop of Operation Sindoor.The defence budget for FY 2025-26 accounts for 1.9% of the country’s projected gross domestic product (GDP). On Thursday, Singh said it was a sobering thought that for protecting 17% of the world’s population, India accounted for only 3% (compared to China’s 12%) of the world’s defence expenditure. “Part of the reason has been that we have not displayed the ability to either sign contracts quickly enough or to deliver on contracts quickly enough. But that is changing,” he said.On Friday, he said India was diversifying its defence purchases from abroad but the focus was on ensuring that the bulk of the budget is spent within the country. “Foreign OEMs [original equipment manufacturers] must get used to the fact that most of our money will be spent within the country, and if they want a share of that, they will have to look at co-producing weapons and systems with Indian firms,” he said, adding that global buys will be the exception rather than the norm.Singh also touched upon the defence relationship with Russia and the United States (US). “Our defence cooperation with Russia is longstanding. They have been our friends through both fair and foul weather, and we are not going to sort of stop our defence cooperation with them anytime soon. But I do want to stress that India follows a policy of strategic autonomy...Items that we need from the Russians we will buy, and to the extent possible, not only buy but also Make in India. We need certain types of equipment from the US, too. Over the last 10 years, we have bought military hardware worth $30 billion from the US.”Singh said the department of military affairs is expected to bring out the next positive indigenisation list soon to boost the domestic defence production sector. India has thus far issued five such lists, placing 509 major defence items under an import ban. “Around 50% of those have been indigenised,” the defence secretary said.