ISLAMABAD: India has announced its largest-ever defense budget, allocating about $85 billion for the coming fiscal year, a 15% increase from last year, as New Delhi moves to accelerate military spending after a brief but intense war with Pakistan that exposed critical shortcomings in its armed forces.

The increase comes just months after India and Pakistan fought a four-day conflict in May last year following a militant attack on civilians in Indian-occupied Kashmir. New Delhi blamed the attack on Islamabad, a charge Pakistan firmly rejected, and offered an independent investigation.

The fighting, involving missile, drone, and artillery strikes, marked the deadliest cross-border escalation since 2019 and ended only after a US-brokered ceasefire.

Presenting the national budget on Sunday, India’s finance minister said the government would prioritize infrastructure and defense, including high-speed rail, submarines and fighter jets. Defense received the single largest allocation, $85.6 billion, or 14% of the total Union Budget, according to the defense ministry.

Defense Minister Rajnath Singh described the spending as “unprecedented,” saying it would help equip India’s armed forces with “fighter jets, drones, ships, submarines and other critical hardware.”

“It is in the best interest of the nation,” Singh said.

Yet senior defense officials have openly acknowledged that the latest conflict revealed serious weaknesses. Defense Secretary RK Singh said the armed forces had sought a 20% increase in funding due to “improved absorption and strategic challenges to fill key capability gaps.”

“We sought a 20% hike based on improved absorption and strategic challenges to fill key capability gaps, and we are delighted that the Finance Ministry has agreed to this unprecedented increase,” he told the Indian publication BusinessLine.

The admission has sharpened scrutiny of New Delhi’s narrative of strength and deterrence. While the government frames the spending surge as modernization, the language used by defense planners suggests a reactive push to address deficiencies laid bare by the May fighting.

According to budget data, overall capital expenditure has risen by 21% to about $31.6 billion, with funds directed toward modern equipment and technological upgrades. The capital outlay alone shows a 17.6% increase when the revised estimates for FY26 are compared with the budget estimates for FY27.

“We will ensure rapid modernization of our armed forces’ capabilities,” the defense secretary said.

India is already negotiating major defense contracts with both domestic and international suppliers, including France, the United States, and Germany. The planned acquisitions include fighter jets, submarines, drones, and precision-guided munitions, systems that featured prominently in the May conflict.

The timing of the budget also reflects mounting external pressures. It is the first budget since US President Donald Trump imposed 50% tariffs on most Indian imports in August. While New Delhi and Washington are negotiating a long-delayed trade agreement, relations have been strained by India’s continued purchases of Russian oil, which the US says help finance Moscow’s war in Ukraine.

For international observers, the scale and urgency of India’s defense spending raise questions about strategic confidence. Rather than signaling dominance, the budget underscores how quickly New Delhi moved to rearm after a short war that tested its readiness and exposed limitations in stockpiles, technology, and operational preparedness.

Despite the record figures, the armed forces did not receive the full increase they initially sought. That shortfall, combined with public acknowledgements of “key capability gaps”, has fueled debate over whether the spending spree reflects long-term planning or an expensive effort to recover credibility after a conflict that challenged India’s assumptions about its own military power.

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India announces record defense budget after Pakistan war exposed gaps