Personnel and pensions costs continue to constrain India’s efforts to modernise its armed forces and strengthen its domestic defence-industrial base. Irrespective of increasing security challenges, investment and research funding continue to suffer. However, efforts are underway that may begin to ease the pension- and personnel-cost burden.
India’s 2023 INR5.94 trillion (USD73.8 billion) defence budget makes it the third largest globally behind the United States and China. However, over half of this, some 53%, is spent on personnel and pensions, limiting the scope for defence procurement and modernisation.
To compound the challenge, with Russia mired in the Ukraine war, India’s armed forces face added problems maintaining their Russian-origin defence equipment. Meanwhile, India is facing an assertive China and tensions with Pakistan. In addition, Delhi aims to modernise its military, cut its reliance on Russia, widen its international supplier base, and prioritise domestic arms production and research and development (R&D) via the ‘Make in India’ initiative.
Defence as a public-spending priority Since 2013, India’s defence budget has more than doubled (see table). However, closer inspection shows the internal pressures on domestic defence spending. Over the same period, it is possible to see a marked decline when examining the defence budget as a share of India’s GDP or as a share of total central-government expenditure.