Budget 2025: India's defense budget increased to ₹6.81 lakh crore
What's the story
In her eighth consecutive budget speech, Finance Minister Nirmala Sitharaman has announced an allocation of ₹6.81 lakh crore for defense in the fiscal year 2025.
The amount is a marginal increase from last year's ₹6.21 lakh crore allocation, emphasizing the government's focus on strengthening national security.
The Ministry of Defense will receive the largest amount (₹681,210.27 crore), with a large chunk (₹180,000 crore) allocated for Capital Outlay on Defense Services.
Strategic direction
Budget 2025: Focus on 'Make in India' and self-reliance
The latest budget allocation is in line with India's strategic focus on the "Make in India" initiative and self-reliance in the defense sector.
In 2024, the Ministry of Defense achieved a record indigenous defense production value of ₹1.26 lakh crore, while defense exports touched ₹21,083 crore.
The launch of the Tata Aircraft Complex and induction of homegrown platforms like the light tank 'Zorawar' highlight this progress toward self-sufficiency.
Financial allocation
Budget 2025: Capital expenditure and R&D in defense
However, the FY25 budget allocated only a meager 27.66% of the defense budget to capital expenditure, with the rest set aside for personnel expenses.
For indigenously produced equipment, capital expenditure has been hiked to 75% of the procurement budget.
About 28% of the total defense allocation, ₹1.72 lakh crore, was allocated for capital acquisition, according to the Interim Budget announcement.
The budget for the Armed Forces's revenue expenditure (excluding salaries) was ₹92,088 crore, while defense pensions are ₹1.41 lakh crore.
Future goals
Budget 2025: India's ambitious defense production and export targets
The government has set ambitious targets to more than triple defense production to ₹3 lakh crore by FY29 and increase exports to ₹50,000 crore.
India was the fourth-largest military spender in 2023, according to the Stockholm International Peace Research Institute (SIPRI).
A Moneycontrol analysis discovered that India has also been ramping up exports, with Myanmar and Vietnam being the two major recipients of arms transfers from India.