India's Defence Budget Needs Urgent Capability Reset Amidst Rising Threats

• India's defence budget for 2025–26 is ₹6.81 lakh crore, 1.9% of GDP, but its effectiveness is hampered by structural weaknesses in spending conversion to military capability.
• Modernisation is squeezed as capital outlay (new acquisitions) is only about one-quarter of spending; the rest goes to revenue expenditure like salaries and pensions (₹1.6 lakh crore for pensions alone).
• The Ministry of Defence returned ₹12,500 crore in FY 2024–25 due to procurement delays and complex bureaucratic procedures, indicating deep dysfunction in the acquisition system.
• Reliance on the L1 (lowest-cost) principle in procurement discourages indigenous design and innovation, leading to import dependence and hindering technological depth.
• A capability reset requires aligning fiscal resources with acquisition reform, industrial depth, and operational requirements, moving beyond just increasing headline numbers.

Why It Matters: India's defence budget needs a fundamental reset to effectively convert spending into military capability.