 "(File) Indian Army's BrahMos weapon systems are displayed during a full dress rehearsal for the Republic Day parade in New Delhi. Reuters")
As Budget 2025 approaches, India’s Defence sector anticipates targeted measures to advance self-reliance, modernization, and global competitiveness. Last year’s allocation of ₹6.22 lakh crore marked a 4.79% increase, demonstrating the government’s focus on enhancing operational capabilities and indigenous manufacturing. However, to achieve the vision of ‘Atmanirbhar Bharat,’ strategic increases in funding and policy reforms are essential.
Strengthening defence allocations
The defence budget must see a substantial increase, particularly in capital outlay, which was Rs1.62 lakh crore in 2024-25. A rise is expected for modernising systems, such as hypersonic weapons, drones and next-gen fighter jets. Moreover, R&D funding requires special attention.
Enhanced funding for Artificial Intelligence (AI), quantum computing and cybersecurity will position India as a leader in futuristic technologies.
Encouraging private sector involvement
Public-private collaboration is a cornerstone of defence sector growth. Budget 2025 should further boost schemes like iDEX, which incubates start-ups and MSMEs, by increasing funding.
Tax incentives and streamlined clearances can also encourage private players to invest in defence manufacturing.
Fostering global partnerships through co-production agreements can attract foreign investment, while initiatives such as the Defence Production and Export Promotion Policy (DPEPP) should be expanded to strengthen the ecosystem.
Expanding defence exports
India’s defence exports surged to ₹16,000 crore in 2023-24, with a target of Rs35,000 crore by 2025. Budget 2025 must introduce incentives such as tax breaks for export-oriented units and marketing subsidies for Indian defence products. Promoting platforms like BrahMos missiles and Akash air defence systems on international platforms will bolster India’s reputation as a global defence exporter.
Developing defence infrastructure
The defence corridors in Tamil Nadu and Uttar Pradesh have demonstrated significant potential. To build on this success, Budget 2025 should allocate funds for expanding these hubs. Investments in infrastructure, testing labs and simulation facilities will not only enhance production capabilities but also create employment and strengthen domestic supply chains.
Impact Shorts
View AllSkill development programmes tailored to the sector’s needs should also be a priority, ensuring a workforce ready to tackle the demands of advanced defence manufacturing.
Focussing on innovation and start-ups
Innovation is pivotal for a self-reliant defence industry. A dedicated fund for start-ups and SMEs can accelerate technological advancements in critical areas. These funds can be utilised for grants, mentorship programmes, and collaborations with academic institutions. Supporting indigenous innovations will ensure India stays ahead in adopting cutting-edge technologies.
Conclusion
Budget 2025 is an opportunity to accelerate India’s journey toward becoming a Defence powerhouse. By increasing allocations for modernization, fostering private participation and promoting exports, the government can strengthen national security and economic growth. Investments in R&D, infrastructure, and start-ups will ensure the Defence sector remains resilient and future ready.
This forward-looking approach will not only enhance India’s defence capabilities but also contribute to its aspiration of being a global leader in defence manufacturing.
The author is Founder & Managing Director at Vijayan Trishul Defence Solutions. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.