India is set to increase its defence expenditure from the current 1.9% of GDP to 2.5% in the upcoming five-year plan, Defence Secretary RK Singh said in an exclusive interaction with CNBC-TV18. The move reflects a strategic shift towards strengthening national security and expanding indigenous capabilities in aerospace, defence manufacturing, shipbuilding, and missile systems.
Singh said the Ministry of Defence will seek additional allocations from the 16th Finance Commission to meet future requirements. He added that defence capital expenditure (capex) has not faced budgetary constraints, but rather challenges in fully utilising the allotted funds. “We did it last year and we are on track to meet our quarterly targets this year as well,” he said.
He revealed that India signed two defence contracts worth ₹2 lakh crore in FY2025 and intends to maintain that pace. “Based on a faster pace of expenditure, we can ask for additional money during the revised estimate stage if needed. It depends on the industry’s absorptive capacity and our ability to take faster procurement decisions,” Singh noted.
The Defence Secretary also confirmed that 75% of the defence outlay would be spent domestically, reinforcing the government’s Make in India and Viksit Bharat 2047 missions aimed at boosting self-reliance. Areas like land systems, munitions, shipbuilding, and aerospace will receive significant investment.
To accelerate indigenous capability development, the Defence Ministry has introduced a new execution model for the fifth-generation fighter jet programme, offering a level playing field to private players alongside public sector units. Singh also confirmed that India expects continuous deliveries of F404 engines from the United States for the Tejas aircraft and is actively evaluating Russia’s proposals for joint production of Sukhoi Su-57 fighter jets.
Additionally, Singh indicated that emergency and fast-track procurement would continue based on operational needs, and allocations may be adjusted at the revised estimates stage if required.
