Union Budget 2025: Modernizing India’s Defence for Tomorrow’s Warfare

As India unveils its Union Budget 2025, the focus on modernizing the country’s defence capabilities has never been more urgent. With a geopolitical landscape marked by increasing instability and rapid advancements in military technologies, the demands on India’s armed forces continue to grow. The budget allocation of ₹6.22 lakh crore for the financial year 2024-25—4.79% higher than the previous year—reflects an incremental step towards addressing these challenges. However, experts argue that more needs to be done to prepare the country for the modern warfare of tomorrow.

Progress in Defence Modernization

India’s strides toward self-reliance in defence are evident, especially in indigenous production and capital expenditure. The Defence Acquisition Procedure (DAP) 2020 has played a key role in prioritizing domestic manufacturing. In FY 2023-24, defence production surged to ₹1.27 lakh crore, a 16.7% increase from the previous year. Notably, 75% of the ₹1.4 lakh crore capital procurement budget for FY 2024-25 is allocated to indigenous products, signaling the government’s commitment to reducing reliance on imports.

Defence exports have also grown exponentially, reaching ₹21,083 crore in FY 2023-24—a remarkable 31-fold increase in the last decade. High-profile products like the BrahMos missile and Pinaka rocket system have gained international recognition. The government has set an ambitious target of achieving ₹35,000 crore in defence exports by 2025, underscoring its vision for India as a global defence manufacturing hub.

Schemes like Innovations for Defence Excellence (iDEX) and the Production Linked Incentive (PLI) program have further boosted innovation and manufacturing in critical defence technologies. These initiatives have encouraged startups and MSMEs to contribute to the sector, paving the way for greater domestic capability in areas like drones, loitering munitions, and next-generation weapon systems.

Challenges in Modernization

Despite these achievements, India faces persistent challenges in modernizing its armed forces. One of the most pressing concerns is the continued reliance on imports for advanced weapon systems, machinery, and critical components. While initiatives like “Make in India” aim to address this dependency, supply chain disruptions—such as delays in the delivery of the S-400 missile systems due to the Russia-Ukraine conflict—highlight the risks of over-reliance on foreign suppliers.

India’s ageing defence inventory further exacerbates the problem. Legacy platforms like T-72 tanks and Bofors howitzers, while reliable in the past, are ill-equipped to handle modern threats. Additionally, delays in procuring and deploying newer systems like the Tejas Light Combat Aircraft and Project 75(I) submarines undermine operational readiness, leaving the armed forces vulnerable, particularly in light of China’s expanding military capabilities.

Bureaucratic inefficiencies also contribute to delays in procurement and planning. Experts, including Amit Cowshish, former Financial Advisor (Acquisition) at the Ministry of Defence, have highlighted the lack of comprehensive defence planning as a critical issue. Fragmented responsibilities across departments often lead to underutilization of allocated funds, further slowing modernization efforts.

The Budget Conundrum

At 1.91% of GDP, India’s defence budget remains insufficient compared to global benchmarks. Experts suggest that India should aim for at least 2.5% of GDP in the next five years to meet its defence modernization goals. A significant portion of the current budget is allocated to personnel costs, leaving limited room for capital expenditure and technological advancements.

TV Chowdary, Managing Director of Premier Explosives Ltd, emphasizes the need for a more balanced approach. “The announcement of 2025 as ‘The Year of Reforms’ is promising, but it must be backed by increased budget allocations for modernization and R&D. Emerging technologies like AI, robotics, and advanced electronics must take center stage to prepare India for future conflicts,” he said.

Recommendations for Strengthening Defence Modernization

1. Streamlining Procurement Processes
   Reducing bureaucratic delays through AI-driven systems and more efficient procedures is crucial. A faster procurement cycle will enable timely deployment of critical technologies and systems.

2. Increasing Capital Expenditure
   A double-digit increase in the defence budget over the next decade is essential. Experts advocate for a revenue-to-capital ratio of 60:40 to ensure a balanced allocation that prioritizes modernization.

3. Promoting Indigenous Manufacturing
   Programs like “Make in India” and PLI should continue to foster domestic manufacturing of critical defence technologies. Strengthening public-private partnerships, particularly in areas like avionics and missile systems, will be key to achieving self-reliance.

4. Boosting Defence R&D
   At least 10% of the defence budget should be earmarked for R&D to accelerate innovation in emerging technologies. Academic institutions and private corporations should collaborate more actively to drive advancements in critical areas like jet engines, unmanned systems, and cyber warfare capabilities.

5. Enhancing Global Partnerships
   Collaborating with countries like the United States, France, and Israel for technology transfer and co-development of cutting-edge systems will strengthen India’s technological base. Relaxing the current defence procurement policy to allow phased technology transfers over 10 years could also encourage greater foreign investment.

The Road Ahead

The Union Budget 2025 offers a mixed bag for India’s defence sector. While the increased allocation reflects the government’s intent to modernize, significant gaps remain in addressing the country’s long-term security needs. Experts agree that a comprehensive strategy, combining increased funding with systemic reforms, is the only way forward.

As global security challenges evolve, India must prioritize the modernization of its armed forces to remain a credible power in the international arena. The road ahead is fraught with challenges, but with sustained focus and commitment, India can achieve its vision of becoming a self-reliant defence powerhouse, ready for the modern warfare of tomorrow.