Conditions right to raise military spend to 2.5% of GDP by FY30: Defence secy

With the Ministry of Defence (MoD) achieving new milestones in budget utilisation and contract signings, along with the expansion and diversification of the domestic defence industrial base, conditions are now aligning for India's defence budget to ideally rise to a minimum of 2.5 percent of gross domestic product (GDP) by FY30, up from the current 1.9 per cent, Defence Secretary Rajesh Kumar Singh told Business Standard, in the wake of Operation Sindoor and the country's new doctrine treating any cross-border terror attack as an act of war.

- BHASWAR KUMAR

The May 7-10 clash with Pakistan, triggered by the April 22 Pahalgam terrorist attack with cross-border linkages, has turned the spotlight on the need for enhancing defence allocations as a share of GDP, taking into account emerging geopolitical challenges.

The defence secretary underscored that, having exhausted the military modernisation budget for the first time in five years in FY25 and signed a record ₹2 trillion worth of contracts, the MoD — if it can sustain this level of utilisation — would be confident in approaching the Union finance ministry and the Finance Commission with the assurance that it can effectively absorb higher allocations and justify a larger share of GDP for defence. "This would hopefully lead to a minimum of 2.5 per cent share of GDP for defence in five years," he said. "Reaching the 2.5 per cent milestone would mark the first step towards a medium-term target of 3 per cent, with capital expenditure on the armed forces increasing to at least 0.8 per cent of GDP from the present 0.5 per cent, at a compound annual growth rate (CAGR) of about 20 per cent per annum," Singh elaborated.

Noting that a potential request for higher outlays in the next Budget would be taken up at the appropriate time, the secretary said that any additional requirement for the current financial year, if needed, would be addressed at the revised estimates (RE) stage, as the Budget estimates (BE) have already been finalised.