Budget 2026 wish list | 'Meaningful increase in defence allocation is essential': Balu Forge director

As Budget 2026 approaches, debate is intensifying over whether India's defence spending is keeping pace with its security challenges, manufacturing ambitions, and regional military balance.

Jaikaran Chandock, Director at Balu Forge Industries, has called for a decisive push in defence spending, suggesting that incremental changes will not be enough to meet India's manufacturing and export ambitions.

Chandock said India's defence ecosystem has already crossed a critical inflection point over the past decade, shifting away from import dependence toward domestic manufacturing and exports. He argued that the next phase now requires deeper structural changes through the Union Budget.

"India's defence ecosystem has undergone a decisive shift over the past decade, from import dependence to an emerging global manufacturing and export hub. As we enter the next phase, Budget 2026 needs to initiate a deeper structural transformation. A meaningful increase in defence allocation is essential given the evolving geopolitical scenario and India's ambition to achieve Rs.50,000 crore in defence exports by 2030."

He stressed that budgetary priorities must continue to reinforce self-reliance and domestic capability, particularly through procurement and private sector participation. "The focus needs to remain on boosting self-reliance in defence manufacturing. There should more budgetary provision to encouraging procurement of indigenously-made equipments. Incentivising private investment needs to be prioritised to unlock growth."

Chandock also underlined the need for higher spending on innovation, saying defence research and development must be strengthened if India is to compete globally. "Budget allocation in defence R&D needs to increase to boost innovation in defence manufacturing. With consistent policy support, technology-led innovation, and broad-based manufacturing capability, India has the opportunity to establish itself as a globally competitive defence manufacturing and export hub."

After a short war with Pakistan last year, calls intensified for raising defence allocation to 4 per cent of GDP. In absolute terms, India's military expenditure has continued to rise. Spending increased from approximately $77.4 billion in 2020 to $83.6 billion in 2024, marking an eight per cent increase in real terms. However, this pace represents a slowdown compared to the 19 per cent rise recorded between 2016 and 2020.

More significantly, defence expenditure has been shrinking as a share of the economy for over a decade. It has fallen from 2.8 per cent of GDP in 2009-10 to 1.9 per cent in 2024-25, the lowest level in at least 16 years. While overall spending has grown, defence now occupies a smaller portion of India's expanding economy.

Comparative data from the Stockholm International Peace Research Institute highlights the gap in regional spending trends. China, which has the largest military budget in Asia, increased its defence expenditure by about 22 per cent between 2020 and 2024, reaching around $318 billion from $260 billion in 2020. India, by contrast, has not matched that pace, with China currently spending nearly four times as much.