Union Budget 2025: Govt sets aside ₹6.8 lakh crore for Defence: Is India keeping pace with China, Pakistan?

Union Budget 2025: Finance Minister Nirmala Sitharaman while presenting the Union Budget 2025 on Saturday, announced that the Prime Minister Narendra Modi-led government has set aside over ₹6.8 lakh crore for the defence sector for FY2025-26, including ₹1.8 lakh crore for the modernisation of the military.

Notably, Finance Minister Nirmala Sitharaman did not spell out the defence allocation in her budget speech.

Growing global conflicts and border skirmishes are driving governments to boost their defence budgets, primarily to acquire advanced equipment and enhance infrastructure in order to effectively respond to unexpected challenges.

But where does India stand against China and Pakistan in terms of its defence Budget? Let's take a look.

Union Budget 2025: How does India's Defence Budget compare with China and Pakistan?

India's defence budget for 2025 has been increased to ₹6.81 lakh crore, up from last year's allocation of ₹6.22 lakh crore. The year’s allocation is almost 9 per cent higher than what it was in the budget estimates ( ₹6.22 lakh crore) for the financial year 2024-25 and nearly 6 per cent more than last year’s revised estimates ( ₹6.41 lakh crore), budget documents showed.

Around ₹1.8 lakh crore is earmarked for modernisation efforts, including the procurement of advanced fighter jets, naval vessels, and artillery systems.

The capital outlay for this year is pegged at ₹1.92 lakh crore, which is crucial for enhancing India's defence infrastructure and technological advancements.

The allocation this year includes a revenue expenditure of ₹3.11 lakh crore and a pension outlay of ₹1.6 lakh crore.

The defence budget accounts for 1.9 per cent of India’s projected gross domestic product (GDP) for 2024-25 and 13.45 per cent of the government’s budget.

A significant portion of the modernisation outlay has been allocated to buying weapons, systems, and equipment from domestic suppliers to achieve the goal of self-reliance. Last year, the government also earmarked 75 per cent of the capital allocation for local procurement.

Pakistan Defence Budget

Pakistan's finance minister Muhammad Aurangzeb had in 2024 June announced a nearly 17.6 per cent hike in the country's defence budget and allocated ₹2.12 trillion for FY2024-25.

According to Pakistan's Dawn newspaper, the allocation for the armed forces in the next fiscal year is set at 1.7 per cent of GDP, maintaining the same proportion of the national pie as last year.

The significant boost in defence spending was reportedly the second-largest in six years. The PML-N government had previously given an 18 per cent hike in the final year of its 2013-18 tenure.

China Defence Budget

In 2024, China announced that its defence budget stands at $236 billion, reflecting an increase of over 7 per cent and marking the 30th consecutive year of growth. This allocation amounts to 1.2 per cent of China's GDP, which is below the global average of 1.8 per cent. When adjusted for purchasing power parity (PPP), China's military spending is estimated at $574 billion.

Furthermore, if corporate funding for defence research and development and other industry-related initiatives are included, some experts argue that China's total annual defence budget could be as high as $711 billion. This substantial investment underscores China's commitment to enhancing its military capabilities amid ongoing regional tensions and strategic ambitions.

According to the Stockholm International Peace Research Institute (SIPRI) China’s military spending in 2023 was 2.096 trillion yuan.