Context:

• The Union Budget 2026–27 has significantly increased defence expenditure, allocating ₹7.85 lakh crore (~$86.7 billion) — a 19% increase from the previous year’s ₹6.81 lakh crore.
• The increase is driven primarily by a 21.8% rise in capital outlay to ₹2.19 lakh crore, aimed at accelerating military modernisation and strengthening deterrence.
• The enhanced allocation reflects a strategic shift toward credible deterrence, operational readiness, and defence self-reliance, rather than military escalation.

Key Features of Defence Budget 2026–27:

• Increased defence allocation: One of the largest increases (total ₹7.85 lakh crore, 15.19% increase over previous year) in recent years, reflecting growing recognition of hard-power requirements in national security.
• Focus on capital modernisation:
  • Capital outlay of ₹2.19 lakh crore (21.8% increase), with fighter aircraft, submarines, drones and unmanned systems, air defence systems, and modern combat platforms as focus areas.
  • This marks a shift from manpower-heavy expenditure to technology-driven capability building.
• Push for defence indigenisation:
  • Around 75% of modernisation funds earmarked for domestic procurement, reinforcing Atmanirbhar Bharat in defence manufacturing.
  • This will promote indigenous weapons platforms, domestic defence industry, strategic autonomy, and reduced import dependence.
• Strengthening operational readiness:
  • Revenue expenditure of ₹3.65 lakh crore will support logistics, maintenance, training, and operational preparedness.
  • Increased spending partly linked to recent operational requirements after Operation Sindoor.

Deterrence Consolidation vs Arms Race Narrative:

• International criticism: Some international observers interpret India's defence expansion as destabilising, escalatory, triggering an Asian arms race.
• Strategic reality:
  • The budget increase reflects deterrence consolidation, closing capability gaps, and reducing vulnerability to coercion.
  • India’s modernisation is characterised by defensive orientation, capability correction, and strategic realism.

Structural Weaknesses:

• India's military preparedness:
  • Air power deficiencies: Fighter squadrons below sanctioned strength, aging aircraft fleets, and limited air defence coverage.
  • Naval constraints: Increasing maritime responsibilities in the Indian Ocean Region (IOR), overstretched naval assets, and need for submarine expansion.
  • Army modernisation gaps: Continued reliance on legacy platforms, slow mechanisation, and equipment obsolescence.
• Impact: These deficiencies affect deterrence credibility and adversary perceptions.

Changing Security Environment:

• Pakistan factor: Pakistan's strategy is closely linked with nuclear deterrence doctrine. Potential reliance on risk-taking behaviour during crises. Possibility of limited conflicts under the nuclear umbrella.
• China challenge: Rapid military modernisation, expanding naval presence, military infrastructure along the Line of Actual Control (LAC), and lessons from the 2020 Galwan crisis.
• Two-front threat: Growing China–Pakistan strategic coordination, possibility of simultaneous pressure along: Western and Northern borders.
• Strategic autonomy concerns:
  • Global uncertainty and transactional foreign policies among major powers. Reduced reliability of external security guarantees.
  • True strategic autonomy requires independent military capability, defence self-reliance, and crisis resilience.

Strategic Significance of Defence Spending:

• Deterrence as a material condition:
  • Deterrence depends on military capability, technological superiority, and operational readiness.
  • Underinvestment in defence can encourage adversary coercion, increase their risk-taking abilities, and raise conflict probability.
• Defence spending as strategic insurance:
  • The defence budget aims to prevent quick military advantage by adversaries, increase conflict costs, strengthen crisis stability, and improve resilience.
  • It is not intended to match adversaries platform-for-platform, and pursue militaristic expansion.

Challenges and Way Forward:

• Fiscal constraints: Defence spending competes with social sector spending, infrastructure investment, and welfare schemes.
  • Build sustainable defence financing: Multi-year defence budgeting, efficient expenditure management, and lifecycle cost planning.
• Fast-track procurement: To minimise slow acquisition processes, bureaucratic hurdles, and cost overruns.
• Technology gaps: Dependence on foreign technologies. Limited domestic R&D capacity.
  • Prioritise emerging technologies: AI-enabled warfare, Autonomous systems, Cyber warfare, and Space capabilities.
• Capability-planning gap: Persistent mismatch between strategic ambitions and military capability.
  • Strengthen defence indigenisation: Expand the domestic defence ecosystem. Promote private sector participation. Improve technology transfer.
• Limited two-front preparedness: Simultaneous conflict readiness remains limited.
  • Improve jointness and integration: Strengthen theatre commands, improve tri-service coordination, and enhance integrated planning.
  • Maintain credible deterrence on: Northern border, Western front, and Maritime domain.

Conclusion:

• The Defence Budget 2026–27 represents a strategic course correction rather than militaristic escalation.
• The increased allocation reflects India's recognition that peace is preserved through credible deterrence and capability, not restraint alone.
• By addressing long-standing capability gaps and strengthening defence self-reliance, India is moving toward a more secure and strategically autonomous posture.
• This is essential for maintaining stability in an increasingly uncertain Asian security environment.