India’s defence budget for 2025-26 has witnessed a significant 9.53% increase, rising from INR 6.22 lakh crore to INR 6.81 lakh crore. This allocation, constituting 13.44% of the total Union Budget, is the highest among all ministries, underscoring New Delhi’s growing emphasis on military preparedness. While India cites external threats and the need for modernization as justifications, the sharp budgetary escalation hints at broader strategic ambitions, potentially extending beyond conventional defence to hybrid warfare and regional power projection.
The primary driver behind India’s increased defence expenditure is its security concerns regarding China and Pakistan. The 2020 Galwan Valley clash with China and persistent border tensions along the Line of Actual Control (LAC) have fueled India’s military expansion. The modernization of the Indian Armed Forces, acquisition of advanced weaponry, and enhancement of naval capabilities are aimed at countering China’s growing influence in the Indian Ocean Region (IOR) and South Asia. However, another dimension of this surge is India’s evolving regional posture. With Bangladesh’s political landscape shifting, India’s strategic depth in Dhaka is perceived to be weakening. The Hasina government’s increasing economic engagement with China and growing independence from New Delhi’s influence could be prompting India to recalibrate its regional approach. This raises concerns over the potential use of unconventional means, including intelligence operations and proxy support, to maintain its strategic foothold.
India has a history of leveraging intelligence and covert operations to shape regional security dynamics. The Research and Analysis Wing (RAW), India’s external intelligence agency, has been active in Pakistan, Sri Lanka, and Bangladesh in the past. Given the current geopolitical shifts, an increased defence budget could facilitate enhanced intelligence operations aimed at destabilizing adversarial regions. Pakistan, in particular, has long accused India of sponsoring terrorism in Balochistan and other areas, citing financial and material support for separatist groups. India’s National Security Adviser (NSA), Ajit Doval, has openly spoken about India’s capability to engage in sub-conventional warfare. This aligns with India’s evolving hybrid warfare doctrine, which integrates conventional military strategies with cyber, psychological, and proxy warfare components.
Another critical area of focus in India’s defence budget is the enhancement of its naval capabilities. The Indian Navy has been strengthening its presence in the Indian Ocean, countering China’s assertive maritime ambitions. The expansion of naval bases in the Andaman and Nicobar Islands and increased military collaboration with the United States, Australia, and Japan under the Quad framework indicate a strategic shift towards maritime dominance. India’s growing naval ambitions also include expanding its blue-water capabilities, allowing it to project power beyond its immediate borders. The commissioning of additional aircraft carriers, acquisition of submarines, and increasing military exercises in the Indo-Pacific region signify an aggressive stance aimed at countering China’s Belt and Road Initiative (BRI) influence in South Asia.
India’s growing defence budget and strategic posture have significant implications for regional stability. The increased military spending, coupled with India’s history of engaging in cross-border intelligence operations, raises concerns about the potential escalation of covert conflicts in South Asia. Countries like Pakistan, Bangladesh, and Nepal must remain vigilant about India’s strategic recalibrations and ensure their internal stability against possible external interferences. Additionally, India’s aggressive military spending and naval expansion could trigger a regional arms race. Pakistan, already facing economic constraints, may find itself pressured to enhance its own defence capabilities, further straining its fiscal resources. Similarly, China could respond with increased military posturing, leading to heightened tensions in the region.
India’s 9.53% increase in defence expenditure for 2025-26 signals a significant shift in its strategic priorities. While New Delhi justifies this as a necessary step for modernization and national security, the broader implications point towards more than just defensive posturing. The budget hike aligns with India’s increasing involvement in hybrid warfare, regional intelligence operations, and enhanced military presence in the Indian Ocean. As India navigates an evolving geopolitical landscape, its defence expansion could serve as both a deterrent and a potential destabilizing factor in South Asia. Regional stakeholders must assess the broader implications of India’s growing military ambitions and prepare for the emerging security dynamics in the region.