Prof DM Deshpande
India’s military spending has surged to $92.1 billion according to the latest data released by Stockholm International Peace Research Institute (SIPRI). It relates to the year 2025 when India launched Operation Sindhoor against Pakistan in retaliation to the Pehalgam terror attack.
The terror attack led to more military spending especially in terms of buying arms, weapons and technology. India used the opportunity to showcase BrahMos, missiles that were deployed with great precision and success. Made in India with Russian collaboration, they have attracted global attention.
While the west has advanced systems, Indian cruise missiles stand out for their frugal cost without compromising on quality, speed or accuracy. They are combat proven with high visibility during the Operation Sindoor. Starting with exports to Asian nations-Phillipines and Vietnam-now countries in the Middle East, Latin America and Africa too have expressed interest in the Indian Supersonic Cruise Missile.
Exports of Rs 5,200 crore for 2025-26 have exceeded the target set by the PM in this regard. The new facility at Lucknow has become fully operational within a year of launching. The company has received two major orders worth Rs 4,000 crore for the current fiscal demonstrating the emergence of India as an exporter of high efficiency cruise missile systems.
Ongoing wars and rise in geopolitical tensions have pushed the global spend on defence needs. The collective military spending by all nations has surged to $2.9 trillion in 2025 suggesting prolonged periods of armed conflicts and tensions. This is a 8.9 per cent growth over the previous year’s expenditure. The 9 per cent rise in military spending in 2024 over the previous year is the highest since the cold war.
In terms of world GDP, defence expenditure accounts for 2.5 per cent, highest since 2009. Unlike in the past, global increase in spending is not a onetime uptick due to war or armed conflict. Rather, the surge represents a structural shift where nations are preparing for longer periods of risks and regional tensions. This is clear from the data which shows 11 years of consecutive growth in global military spending.
In a decade the total spending on this account has risen by a massive 41 per cent. In the debate on expenditure on defence vs developmental expenditure, military spending seems to have emerged with an upper hand, well, at least for now.
Experts have been warning from time to time-that the unbridled spending on defence leads to diversion of scarce resources from welfare, healthcare, education and poverty alleviation. The UN estimates that the annual shortfall in funding Sustainable Development Goals (SDG) is $4 trillion and the gap is set to rise to $6.4 trillion by the year 2030, mostly due to higher defence spending.
The trade off is that less than 10 per cent of global expenditure is sufficient to eradicate extreme poverty and vaccinate every child worldwide. Yet, ironically scarce funds remain locked up in defence budgets and arms purchases. Further the UN Report 2025 points out that less than 4 per cent of the current spending on the military could eradicate hunger in the world.
India, over the years, has emerged as the 5th biggest spender on military. Yet its share in the world is just 3.2 per cent whereas the US accounts for 33 per cent and China 12 per cent. Pakistan ranks 31st in this order; its expenditure was estimated at $11.9 billion in 2025. But its annual spend has surged by 11 per cent driven largely by imports from China.
India cannot ignore the security dilemma in its region where China spends 3.6 times on military. Its defence burden of around 2.3 per cent of the GDP is largely in line with the global average. But India nurses enhancing capabilities across land, sea and air and also in emerging domains such as space and cyber.
India cannot compromise on its defence preparedness, given the both the regional and global equation and geopolitical factors. Hence, as a deliberate policy measure, it has embarked on a journey of reducing imports of arms. Even the exports promotion has got a boost with Operation Sindoor.
The 2025-26 exports are pegged at Rs 38,424 crore ($4.6 billion). It has emerged as a significant exporter of military equipment though it is still early days. The US leads the pack with annual exports of about $50 to $60 billion (40 per cent share in global market) followed by Russia $15 to $20 billion (15 per cent share) and France $12 to $15 billion.
India has set its eyes on reaching a target of $10 billion which will make it one among the top five global exporters. It is not far-fetched, yet, there are challenges; Indian exports have grown by over 1000% in the last ten years. It is estimated that exports need to rise by 50- 60 per cent annually to reach the target by 2030.
The broad policy thrust, clarity and determination seem to be working well for India. Unlike in the past, it is not just the PSU’s that are leading the Indian production and exports. The private sector too has a significant share of 45 per cent in the total exports and the defence PSU’s account for the larger 55 per cent share. Exports are now broad based with more than 80 countries in the list.
The broad figure of $92.1 billion military spending should not be construed as being spent on importing arms and weapon systems. Rather, it is the whole defence budget, 70 per cent of which goes to pay salaries and pensions, while 30 per cent remains for modernization and R&D. Since the 8th Pay Commission is expected to submit its report in a year or so, the wage bill is bound to rise significantly in FY28.
Yet it is imperative to ensure growth of capital outlays for modernization in the defence sector, which is given Rs 1.80 lakh crore in the budget for 2026-27 representing over 26 per cent of the overall defence budget. R&D too has got a 12 per cent higher allocation which again needs to be sustained and enhanced as modern warfare is intricately interlinked with high tech and AI.
The author has four decades of experience in higher education teaching and research. He is the former first vice-chancellor of ISBM University, Chhattisgarh.
