Defence budget 2026-27: How powerful will India’s military really be against China & Pakistan?

With a 15% boost in defence spending, India aims to modernise its military – but can it outmatch China and Pakistan?

New Delhi: Union Finance Minister Nirmala Sitharaman presented the Union Budget for 2026-27 in the Lok Sabha on Sunday. The budget fixed how much money each ministry will receive in the coming financial year. Defence once again emerged as the single largest allocation.

For 2026-27, the defence budget has been raised by close to 15 percent. Last year, the allocation stood at Rs 6,81,210 crore. This year, it has gone up to Rs 7,84,678 crore.

The Ministry of Defence said in a post on X that the higher allocation focusses on modernisation, technological innovation and easier procurement to improve the use of resources across the armed forces.

A closer look at the numbers shows where the increase is headed. Capital outlay has seen the biggest rise. It has gone up by 21.84 percent, from Rs 1.80 lakh crore to Rs 2.19 lakh crore. This head covers spending on weapons, platforms and military equipment.

Spending on Defence Services (revenue) has increased by 17.24 percent. The allocation has risen from Rs 3.11 lakh crore to Rs 3.65 lakh crore. This part of the budget pays for daily military operations. It includes maintenance, fuel, repairs, logistics and salaries.

The defence pension bill has also gone up. It now stands at Rs 1.71 lakh crore after a 6.53 percent increase.

The timing of this rise matters. The increase comes months after India and Pakistan faced a military standoff in May last year. After a deadly militant attack in Jammu and Kashmir’s Pahalgam, India struck Pakistan and Pakistan-administered Kashmir ‘Operation Sindoor’ and destroyed terror launch pads. Military exchanges followed. The Indian Army later said the situation eased after a ceasefire request from Pakistan’s director general of military operations (DGMO).

Since then, expectations had grown that defence spending would rise.

Defence Minister Rajnath Singh welcomed the budget. He said the allocation would strengthen India’s defence capabilities. “I thank Prime Minister Narendra Modi for allocating Rs 7.85 lakh crore to the defence sector,” he said.

However, some analysts and defence experts are unconvinced. Pointing to rising inflation and the weakening rupee, they described the increase as inadequate. The real value of the increase, they argued, gets neutralised by these pressures. They called it a flat budget in practical terms.

Recent conflicts have changed how wars look. During the India-Pakistan standoff, drones and surveillance technology played a visible role. Last month, Chief of Defence Staff General Anil Chauhan said Indian forces are moving from network-based warfare to data-driven warfare. He said artificial intelligence is becoming critical infrastructure for future security.

He further said advanced sensors and AI are reducing surprise on the battlefield. According to him, technological edge now decides outcomes and technology alone is not enough. He stressed the need for intellectual readiness and adaptive military leadership.

The question rises here is whether the new budget supports these ambitions. Analysts said India needs to finalise major defence deals. The country plans to acquire 114 new fighter aircraft and six submarines. They referred to a $10 billion submarine deal with Germany and said the fighter aircraft deal could cost $30-35 billion. Such projects need long-term financial planning.

They added senior leaders have repeatedly spoken about technological modernisation since Operation Sindoor. Such modernisation requires sustained funding, and a 15 percent increase does not make this task easy.

Defence now accounts for 14.68 percent of the total Union Budget. Last year, the share was 13.45 percent. Defence budgeting is never simple as factors like Operation Sindoor, China’s rapid military progress, the push for self-reliance and the urgent need for modern equipment influence decisions.

The 2026-27 allocation is 15.27 percent higher than last year’s Rs 6.81 lakh crore.

Modernisation goes beyond aircraft and submarines. Drones and cyber warfare now matter as much as traditional platforms. Shortages are severe. The Indian Air Force is authorised 42 fighter squadrons. It presently has only 29 to 30. Each squadron has around 20 aircraft. This creates a gap of nearly 250 to 300 aircraft.

Many submarines are ageing and need replacement. Helicopters and training aircraft also need renewal. All these needs require large and constant funding.

A regional comparison adds context. After its clash with India, Pakistan increased its defence budget by 20.2 percent for 2025-26. Islamabad raised spending from 2,122 billion to 2,550 billion Pakistani rupees. This amounts to 1.97 percent of its GDP.

China’s defence budget in 2024 stood at 1.7 percent of its GDP of $18.74 trillion. Bangladesh spent about 0.9 percent of its $450 billion GDP on defence. India’s defence budget stands at about 1.9 percent of its $4 trillion GDP.

These numbers show Pakistan and Bangladesh spend far less in absolute terms. China spends far more. Beijing’s defence spending is far ahead. Pakistan’s budget cannot be dismissed. China supports Pakistan and other neighbours. Therefore, direct comparisons have limits.

On how much India should spend, analysts said defence needs at least 3 percent of GDP. They said military planners have made this demand for decades. The GDP has grown many times over, but the defence spending has stayed near 2 percent. Rapid modernisation requires a steady 3 percent commitment.

The new budget points to intent. The real test lies in execution, timelines and sustained political will.