The American-Israeli attack on Iran nudged and winked, if not instigated, by Iran’s other regional adversaries has once again underscored that multiple obituaries of the post-1945 US-anchored, soi-disant ‘rules-based’ international order are repeatedly being foregrounded. The world has regressed to the early 20th century where outcomes are once again being measured in hulls, squadrons and technological edges.
In this churn, the US has delineated a new baseline: its defence budget has almost crossed the trillion-dollar threshold, a sum larger than the next nine nations’ combined. A significant portion of this is being channelled into a new generation of capabilities, from the yet-unproven ‘Golden Dome’ architecture to the software-defined platforms of Silicon Valley’s defence tech startups.
Opposite this is the People’s Liberation Army of China. Since the Taiwan Strait crisis of 1995-96, Beijing maintained a sustained, double-digit increase in defence spending for two decades, a trajectory that moderated in 2016 to a still-steady 7.6 percent annual rise in the decade since.
From a defence expenditure roughly a sixth of the US’s in 2012, China compressed the gap to roughly a third by 2024. In the Indo-Pacific, China’s defence spending is hegemonic: more than thrice that of India, five times that of Japan and nearly seven times South Korea’s. The Chinese spend more on defence than the next 22 Indo-Pacific militaries combined, including India, Japan, South Korea, Australia and Taiwan. It translates into the world’s largest navy, a modernised air force operating stealth aircraft, and an integrated missile force predicated on power projection far from its shores.
For a nation of India’s geostrategic heft, a peninsula jutting into the Indian Ocean with a contested 15,000-km land frontier, this is the unforgiving context. We are not just situated in a hostile neighbourhood, but also positioned in the crucible of the 21st century’s defining great-power competition.
Against this backdrop, India’s own fiscal calculus for national security demands a cold, hard audit. The M M Joshi Committee flagged a chilling trend in 2018: defence expenditure had slid from 2 percent of GDP in 2014-15 to 1.6 percent by 2017-18. It has averaged 1.9-2.1 percent since then—a persistent pattern of stagnation.
For 2026-27, the Budget estimated defence spending at Rs 7.85 lakh crore. While this represents an over-15 percent increase from the last fiscal, as a percentage of GDP it hovers around 2 percent, close to the average since 2014. Within this constrained envelope, the twaddle runs deeper. Capital outlays remain anaemic—less than 30 percent of total defence spending, stuck at less than 0.6 percent of GDP for the three services. These modest outlays are strangulating the modernisation the armed forces so desperately require.
The Indian Air Force’s struggle to replace its ageing squadrons and expand its fighter fleet is held hostage to this dynamic. The production ramp-up of the Tejas light combat aircraft remains painfully sluggish, a source of public frustration. The advanced medium combat aircraft, however, languishes in bureaucratic limbo.
The navy’s submarine and surface fleet expansion, from Project S5 to the P-18 class, face interminable headwinds. Projects 75-I and 77 for conventional and nuclear-powered submarines struggle to translate ambitious policy into steel in the water, even as Chinese shipyards launch vessels at a pace outstripping the US’s.
The army requires advanced surveillance, rugged communications and specialised weaponry. Artillery modernisation remains a work in progress—delayed, scaled down or proceeding in numbers too small to make decisive operational difference.
The quest for ‘atmanirbharta’ in defence is mired in systemic inertia. The Defence Production & Export Promotion Policy 2020 ambitiously aimed for a turnover of ₹1,75,000 crore and exports of ₹35,000 crore by 2025. Yet, the journey from policy to production has been labyrinthine. The administration was quick to trumpet defence exports reaching ₹23,000 crore, though it was missing the target by more than a third. The response? An even more imprudent target of ₹50,000 crore for 2029. This pattern is the government’s ‘announcement is the achievement’ syndrome in its most distilled form.
Our public defence enterprises remain hamstrung by uneconomic order quantities, a lack of long-term production capabilities and a chronic gap between orders placed and deliveries made. Furthermore, our research and development architecture has struggled to deliver cutting-edge, user-ready systems. The inability to master critical technologies keeps us tethered to foreign equipment manufacturers for hardware as well as the entire lifecycle of support.
This dependency extends beyond hardware into the very doctrine of warfare. India’s concept of defence preparedness remains dangerously narrow, fixated on conventional, full-spectrum conflicts of a bygone era.
The Trump administration, which seems to be on track to build his ‘dream military’ with a $1.5-trillion defence budget by 2027, has sought $384 billion from the US Congress on advanced technology and R&D for 2026. The UK has announced $538 million for defence innovation. The European Union and its member states spend roughly $17 billion annually on defence innovation.
According to a 2025 Pentagon report, Beijing invests on an ‘aggressive’ scale in chokepoint technologies including AI, semiconductor, quantum and biotechnology. The Chinese continue to deploy AI for unmanned systems, intelligence, surveillance collection and analysis, decision-making assistance, cyber operations and information campaigns.
A nation with India’s aspirations cannot afford to be perpetually catching up. The path forward demands a roadmap. We must raise defence spending to a minimum of 3 percent of GDP by 2030 and to 5 percent by 2035. For a future-ready defence architecture built on design and development, Indian industry must be incentivised to innovate and take risks. The national scientific establishment, from government departments to the IITs, must be coalesced into a coherent defence R&D ecosystem.
It is the baseline premium for insurance in a world on fire. The wake-up call has been sounded by the undeniable realities of our geostrategic environment. The question is whether the government comprehends the gravity of the situation. The locust years must end.
Manish Tewari | MP, lawyer, former Union I&B minister and author of A World Adrift
(Views are personal)
(manishtewari01@gmail.com)