India Expected to Increase Defence Budget in 2026 Amid Rising Geopolitical Tensions
Experts predict a significant increase in India's defence budget for 2026, building on the current allocation of ₹6.80 lakh crore for FY2025-26. The expected rise is driven by geopolitical tensions, China's military expansion, and India's push for defence self-reliance. India's strategic framework focuses on five key areas including China as primary challenge, two-front contingency planning, and technology-driven warfare capabilities.
*this image is generated using AI for illustrative purposes only.
Market experts are predicting a substantial increase in India's defence budget allocation for 2026, citing escalating global geopolitical tensions and the need for enhanced military preparedness. The anticipation comes amid ongoing international conflicts and China's continued military expansion in the region.
Current Defence Budget Allocation
India's defence sector received significant funding in the current fiscal year, with structured allocation across various modernisation initiatives.
| Component | FY2025-26 Allocation |
|---|---|
| Total Defence Budget | ₹6.80 lakh crore |
| Military Modernisation | ₹1.80 lakh crore |
Expert Predictions for Budget 2026
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, expressed confidence about the upcoming budget allocation. "Higher allocation for defence in the 2026 Budget is certain," Vijayakumar stated, indicating strong market expectations for increased defence spending.
The predicted increase stems from multiple factors beyond immediate geopolitical concerns. Experts point to India's strategic push for self-reliance in defence manufacturing as a key driver for enhanced budget allocation.
Strategic Framework Guiding Defence Spending
Manoranjan Sharma, Chief Economist at Infomerics Ratings, outlined India's comprehensive approach to defence budget planning. According to Sharma, India's defence spending decisions follow a structured five-point framework:
- China as the primary long-term strategic challenge
- Two-front contingency involving China and Pakistan
- Indigenisation under "Make in India" and "Atmanirbhar Bharat" initiatives
- Naval expansion across the Indian Ocean
- Shift toward technology-driven warfare, including drones, cyber, and space capabilities
Investment Priorities and Approach
India has been strategically increasing its defence outlays with specific focus areas. The country prioritises capital expenditure over personnel costs and invests heavily in missiles, air defence, and surveillance capabilities.
Sharma emphasised that India's approach represents a measured strategy rather than reactive spending. "Rather than sudden spending spikes, the trajectory points toward sustained increases, improved efficiency, and greater reliance on private-sector participation and joint production," he explained.
Regional Security Considerations
The defence budget planning takes into account complex regional dynamics and strategic partnerships. Sharma noted that China's decision-making regarding regional issues is "driven primarily by the regional military balance, the credibility of U.S. alliances, and domestic political considerations."
Regarding India's border security, particularly concerning Arunachal Pradesh, experts indicate that "Beijing calibrates pressure on India based on India–U.S. strategic proximity, India's military preparedness along the Line of Actual Control (LAC), and internal stability in Tibet."
The expected increase in defence allocation for Budget 2026 reflects India's commitment to maintaining strategic preparedness while advancing its indigenous defence manufacturing capabilities. Market analysts view this as part of India's long-term defence modernisation strategy rather than a short-term response to current global tensions.
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