Operation Sindoor has just reminded New Delhi that the Pak-China military axis is deepening in real time. The only credible answer is to lift defence spending to 2.5% of GDP, push capital outlays above ₹1 trillion and double the R&D slice before the next crisis rings
the doorbell.
On the morning after Operation Sindoor, two facts became undeniable. First, Rawalpindi and Beijing are no longer “parallel” irritants; they are synchronising doctrine, logistics and even missile footprints. Second, the eastern border is no longer a dormant flank-Dhaka’s internal churn has opened a third potential front. A country that once planned for a “two-and-a-half front” contingency must now insure against a full “three-front” war. That insurance premium is called the Union Budget 2026-27.
The finance ministry has reportedly received a 20% hike request from South Block-well above the customary 8-10% annual increment. Applied to the current year’s ₹6.81 lakh crore (81 billion), the number crosses ₹8.17 lakh crore, nudging India towards the psychological 100 billion mark. Is it large? Yes. Is it abnormal? Not if you realise that a single Multi-Role Fighter Aircraft (MRFA) tender, six Project-75(I) nuclear submarines and two additional S-400 squadrons will swallow almost ₹2 lakh crore over the next seven years-money that
cannot be “found” through the usual year-end juggling.
The headline figure, however, will matter only if the capital outlay (CAPEX) jumps correspondingly. This year’s capex is a meagre 24-25 billion-barely 0.7% of GDP and less than one-third of the total defence pie. For a nation ring-fenced by adversaries, that is abysmal. Industry and the Services have therefore pitched for a ₹45,000 crore capex bump in 2026-27, which would push the hardware wallet past the 40 billion mark (≈1% of GDP). The medium-term goal is clearer: defence capex must climb to 2% of GDP so that India stops importing emergency spares on the eve of every stand-off.
DRDO Chief Samir V. Kamat’s slide that went viral last month said it plainly: India devotes 5.75% of its defence budget to research and development; the United States allocates more than 10%. That gap explains why we still import engines for the Tejas, seek foreign seekers for our missiles and rent satellite bandwidth on the eve of every operation. A 20% overall hike gives the government head-room to double the R&D share to 10% without cutting a single bullet from the pension book. When folded into the new “mission-mode” funding route-where private start-ups can bid alongside HAL, BEL and shipyards-the extra ₹16,000 crore for science could seed an Indian version of DARPA within this decade.
Uttar Pradesh and Tamil Nadu have built swanky defence industrial corridors; ribbon-cuttings are over, but the assembly lines are thirsty for firm orders. A 20% budgetary surge, with 25% of it ear-marked for domestic procurement, translates into ₹50,000 crore of local
contracts-enough to keep drone, missile and radar factories humming through the next downturn. More importantly, the government is finalising a rule-change that will allow private consortia to “co-develop” prototypes with the Services, ending the monopoly of PSU-led
development teams and compressing 10-year cycles into four.
China’s DF-41 brigades in Xinjiang and Pakistan’s Babur-III sea-launched cruise missile together compress India’s nuclear response window. MIRV-ing India’s own Agni-P, stationing a third SSBN on patrol and building hardened silos in the foothills all cost money-precisely the kind of “black” line-items that get sacrificed when the topline is frozen. A 2.5% GDP defence envelope would let the Strategic Forces Command modernise without cannibalising the conventional slice.
Can a developing economy afford 100 billion on defence? Flip the question: can a 4 trillion economy afford to be invaded? India’s debt-to-GDP ratio has stabilised, the tax base is widening and the fiscal deficit is targeted below 4.5% next year. A one-time 50-basis-point
re-prioritisation-roughly what the country spends annually on petroleum subsidies-will buy a decade of deterrence. Moreover, every additional rupee spent on indigenous hardware comes back as GST, corporate tax and employee income-tax within three financial years,
making the “net” cost of defence spending significantly lower than the headline outlay.
Operation Sindoor was not just a military success; it was a geopolitical invoice. The bill lists three aggressive fronts, a tightening technology denial regime and the urgent need to field unmanned swarms, long-range precision fires and underwater leg of the nuclear triad. Paying that bill through a 20% defence hike is therefore not fiscal adventurism-it is the minimum insurance premium for a nation that intends to survive the 21st century on its own terms. If the finance minister signs the cheque in July, she will not be buying weapons; she will be buying time for India to become the very great power it aspires to be.
