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India’s Defence Strategy 2024-25: Budget, Recent Purchases, and Future Plans

Nitesh

India’s defence sector is pivotal in ensuring national security amid complex regional dynamics, including tensions along the Line of Actual Control (LAC) with China and ongoing concerns with Pakistan. The financial year 2024-25 has seen a robust defence budget, significant equipment acquisitions—including Rafale jets and advanced systems—and a strong push for self-reliance through domestic manufacturing. This article explores India’s defence budget, recent and upcoming purchases, the role of Rafale jets, advanced defence systems, and the benefits and future prospects for Indian defence companies. Written in simple language, it aims to provide a comprehensive understanding of India’s defence strategy and its impact on the domestic industry.

Defence Budget 2024-25: Funding Security and Self-Reliance

The Union Budget for 2024-25 allocated Rs 621,940.85 crore (approximately $75 billion) to the Ministry of Defence (MoD), the highest among all ministries (PIB Budget 2024-25). This budget, a 4.79% increase from 2023-24 and 18.43% higher than 2022-23, reflects India’s commitment to modernizing its armed forces and promoting indigenous production.

Below is a breakdown of key allocations:

Category Amount (Rs Crore) Purpose
Total MoD Allocation 621,940.85 Funds all defence activities, including purchases, salaries, and pensions
Capital Acquisition 172,000 Buying modern weapons, aircraft, and equipment
Domestic Procurement (Capital) 105,518.43 75% of modernisation budget for Indian manufacturers
Sustenance & Operational Readiness 92,088 Maintenance, ammunition, and troop deployment
Defence Pension Budget 141,205 Supporting 32 lakh pensioners via SPARSH system
Border Roads Development 6,500 Building strategic roads along borders
Coastal Security (Coast Guard) 7,651.80 Patrol vessels and surveillance systems
DRDO (Research & Development) 23,855 Developing missiles, drones, and other technologies
Innovation in Defence (iDEX) 518 Supporting startups and innovators in defence technology

Key Highlights

  • Capital Acquisition: The Rs 172,000 crore for capital acquisition, a 20.33% increase from 2022-23, supports purchases of advanced systems. Of this, Rs 105,518.43 crore (75%) is reserved for domestic procurement, aligning with the “Aatmanirbhar Bharat” initiative (Delhi Policy Group).
  • Operational Readiness: Rs 92,088 crore ensures the armed forces are prepared, covering maintenance and troop mobility.
  • Pensions: Rs 141,205 crore, a 2.17% increase, supports veterans.
  • Border Infrastructure: Rs 6,500 crore for border roads, a 30% increase, enhances logistics in remote areas.
  • Research and Innovation: Rs 23,855 crore for DRDO and Rs 518 crore for iDEX foster technological advancements.

While the budget emphasizes immediate security and self-reliance, some analysts suggest that spending, at 1.9% of GDP, may not fully meet long-term modernization needs compared to rivals like China (Stimson Center).

Rafale Jets: Bolstering Air and Naval Capabilities

India’s acquisition of Rafale jets, manufactured by France’s Dassault Aviation, is a cornerstone of its air force modernization and is expanding to the navy. The Indian Air Force operates 36 Rafale jets, delivered following a 2016 deal. These multi-role fighters feature:

  • Active Electronically Scanned Array (AESA) Radar: Enhances target detection.
  • Helmet-Mounted Display Systems: Improves pilot awareness.
  • Versatile Weapon Systems: Includes Meteor and SCALP missiles for air-to-air and air-to-ground missions.

In 2025, India signed a $7.4 billion deal for 26 Rafale Marine jets for the Indian Navy (Reuters April 2025). This includes 22 single-seater and 4 twin-seater aircraft, with deliveries expected by 2031. The Rafale Marine, designed for carrier operations, features:

  • Strengthened Airframe: Withstands carrier landings.
  • Tailhook: Enables arrested landings.
  • Thales RBE2-M Radar: Optimized for maritime operations.
  • SPECTRA Electronic Warfare Suite: Tailored for naval missions.

These jets will operate from INS Vikrant and INS Vikramaditya, replacing the Navy’s aging MiG-29K fleet and enhancing combat capabilities in the Indian Ocean, where China’s naval presence is growing.

Recent Defence Purchases (2024-25): Modernizing with Indigenous Focus

In 2024, India approved 10 capital acquisition proposals worth Rs 1,44,716 crore ($17.37 billion) on September 4, 2024, with 99% sourced from Indian manufacturers (Reuters September 2024). Key purchases include:

  • Future Ready Combat Vehicles (FRCV): Next-generation tanks to replace T-72 models, featuring advanced mobility and firepower.
  • Air Defence Fire Control Radars: Detect drones and missiles, strengthening air defence.
  • Dornier-228 Aircraft: For surveillance and transport, enhancing border monitoring.
  • Next Generation Patrol Vessels: Bolster Navy and Coast Guard coastal security.

A Rs 26,000 crore contract with Hindustan Aeronautics Limited (HAL) for 240 AL-31FP Aero Engines for Su-30MKI jets ensures Air Force readiness (Hindustan Times). The Zorawar Light Tank, designed for high-altitude operations, completed trials in 2024, showcasing indigenous innovation (Times of India).

Advanced Defence Systems: Cutting-Edge Capabilities

India has acquired several advanced systems in 2024-25, combining indigenous development and strategic partnerships:

  • Predator Drones: Acquired from the US, these UAVs enhance maritime surveillance (Hindustan Times).
  • Voronezh Radar System: A $4 billion deal with Russia for early warning radar to detect ballistic missiles (Economic Times).
  • Light Combat Helicopter (Prachand): Indigenous HAL helicopter for high-altitude operations, equipped with advanced weaponry.
  • Drishti 10 Starliner Drone: India’s first MALE drone by Adani Defence, supporting ISR missions (Times of India).
  • C-295 Transport Aircraft: Produced with Airbus, enhancing Air Force logistics (DefenceXP).
  • INS Nirdeshak: Survey vessel with advanced hydrographic systems.
  • INS Malpe and INS Mulki: Anti-submarine warfare craft with 80% indigenous content.

These systems reduce import dependency and showcase India’s growing technological prowess.

Upcoming Defence Purchases (2025-26): Sustaining Momentum

On March 20, 2025, the Defence Acquisition Council approved purchases worth Rs 540 billion ($6.26 billion) (Reuters March 2025). These include:

  • T-90 Tank Engines: Upgrading performance and service life.
  • Anti-Submarine Torpedoes: Enhancing Navy capabilities.
  • Airborne Early Warning and Control (AEW&C) Systems: Improving Air Force surveillance.

The 2025-26 budget allocates Rs 6.81 lakh crore, a 9.53% increase, with Rs 1.8 lakh crore for capital outlay, of which Rs 1.11 lakh crore is for domestic procurement (PIB Budget 2025-26). The Air Force plans to procure Tejas Mk1A and Mk2 jets and pursue the Multi-Role Fighter Aircraft (MRFA) programme to address a squadron shortage (Wikipedia IAF Future).

Benefits to Indian Defence Companies

Indian defence companies are reaping significant benefits from the government’s focus on self-reliance and increased defence spending.

Increased Domestic Procurement

  • The 2024-25 budget’s 75% domestic procurement allocation (Rs 1.05 lakh crore) ensures a steady flow of orders for companies like HAL, BEL, and Larsen & Toubro (Delhi Policy Group).
  • The Rs 1.45 lakh crore in 2024 purchases, with 99% from Indian firms, includes contracts for FRCVs, Dornier-228 aircraft, and patrol vessels, boosting revenue and supply chains (Reuters September 2024).
  • In 2025-26, Rs 1.11 lakh crore (75% of the modernisation budget) is reserved for domestic procurement, with Rs 27,886 crore specifically for private sector firms (PIB Budget 2025-26).

Support for Innovation

  • The iDEX scheme, with Rs 518 crore in 2024-25, has awarded over 350 contracts since 2018, supporting startups and small firms (Stimson Center).
  • A Rs 1 lakh crore deep-tech fund encourages private sector R&D, fostering innovation in areas like AI and robotics (ORF Budget Analysis).
  • 25% of defence R&D is reserved for industry and startups, with INR 865 crore allocated in 2024-25.

Economic and Employment Impact

  • Domestic manufacturing creates jobs across the supply chain, contributing to GDP growth. Defence production reached Rs 1.27 lakh crore in FY 2023-24, a 60% increase since 2019-20 (Wikipedia Defence Industry).
  • Companies like Adani Defence, with the Drishti 10 drone, and HAL, with the Prachand helicopter, are driving economic activity through indigenous projects.

Future Prospects for Indian Defence Companies

The future of Indian defence companies is promising, driven by government policies, increasing budgets, and global opportunities.

Growth Projections

  • Defence production is expected to exceed Rs 1.60 lakh crore ($19 billion) by 2025-26, with a target of Rs 3 lakh crore ($35 billion) by 2029 (Wikipedia Defence Industry).
  • The sector is projected to grow at a 20% CAGR from FY24-FY29, supported by private sector participation (APDR).
  • The armed forces are expected to spend $130 billion on capital procurement over the next 5-6 years, much of which will benefit domestic firms (Delhi Policy Group).

Export Potential

  • Defence exports reached Rs 21,083 crore ($2.43 billion) in FY 2023-24, a 32.5% increase, with a target of Rs 50,000 crore ($5.8 billion) by 2029-30 (IBEF).
  • India aims to be among the top 5 global defence producers by 2025, with exports to over 75 countries (Invest India).

Policy Reforms

  • In January 2025, the Defence Secretary announced reforms to the procurement policy within 6-12 months, enhancing private sector roles (Wikipedia Defence Industry).
  • The third indigenisation list could result in orders worth Rs 2,10,000 crore by 2030, with a goal of complete indigenisation by December 2025.

Challenges

  • Import dependency, at 25-30% of defence products, remains a hurdle (Wikipedia Defence Industry).
  • Meeting ambitious production targets requires sustained investment and streamlined processes (ORF Industry Challenges).

Balancing Security and Growth

India’s defence strategy addresses regional threats, particularly along the LAC, where recent agreements with China aim to restore peace (India Today). The focus on indigenous procurement, with 95.45% of 2024 contracts signed with Indian vendors, reduces reliance on imports. Defence exports, private sector innovation, and initiatives like the Defence Industrial Corridors in Uttar Pradesh and Tamil Nadu are positioning India as a global defence hub.

Conclusion

India’s defence strategy in 2024-25 is a balanced approach to modernization, self-reliance, and economic growth. The Rs 6.22 lakh crore budget, acquisitions like Rafale jets and Predator drones, and upcoming purchases demonstrate a commitment to security. Indian defence companies are benefiting from substantial domestic procurement, innovation support, and job creation, with a projected sector growth of 20% annually through 2029. As India aims for Rs 3 lakh crore in production and $5.8 billion in exports, sustained investment and policy reforms will ensure a thriving defence industry, contributing to a “Viksit Bharat” by 2047.

Key Citations:


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