Transforming India's defence capabilities

Published on :

26 August 2025

This fact sheet looks at the contemporary transformation of India's defence apparatus. It begins by highlighting the constant increase in the country's military budgets and manpower, as well as the desire to develop a local defence industry. It then analyses some of the limits to the transformation underway, and concludes with the prospects for increased militarisation in Asia in the years ahead, in the context of a form of "security dilemma".

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Summary

India's defence system has been transformed in recent years, with an increase in military budgets and manpower and a determination to develop a solid national defence industrial base;

However, there are limits to the transformation underway, particularly in terms of budget allocation and the development of local industrial production, and India is still struggling to compete with neighbouring China in the military field;

The risk today is a sustained militarisation of Asia, promoted by the exacerbated rivalry between the three nuclear powers of China, India and Pakistan.

Context - The emergence of a military power?

An economic and therefore political power in the making, India has also been transforming itself militarily in recent decades. An article in Stimson Center argues that the modernisation of the Indian Army followed several phases focusing on different aspects in the period 1947-2014.

Years	Focus on modernisation initiatives
1947-1962	Restructuring of colonial institutions and creation of new military organisations;
1947-1962	Guarantee of the autonomy of military institutions ;
1972-1999	Expanding the technological base of the armed forces ;
1999-2014	Improving joint coordination and interoperability.

Different phases in the modernisation of the Indian Army before 2014

The transformation of the Indian army has been ongoing since 2014. The current Prime Minister Narendra Modi of the Bharatiya Janata Party (BJP) came to power that year with the promise of major reforms to the country's defence. In general terms, as highlighted below, the Modi government is deliberately reviving a decades-long trend of steadily increasing India's military budget, after a period of temporary stagnation.

From twelfth place in 1990, India will have the fifth largest military budget in the world by 2024, according to the Stockholm International Peace Research Institute (SIPRI). In addition to defence spending, the number of Indian army personnel has also increased in recent years.

According to some estimates, India will have the largest army in the world by 2020. The country has also been expanding its military presence in recent years, for example by setting up new naval air bases on islands in the Indian Ocean.

Other more specific transformations are being undertaken by the Modi government. One of the key reforms is the reorganisation of India's defence establishment. For a long time, one of the weaknesses identified in the Indian military system was the lack of coordination between the army, the air force and the navy. The three components enjoy a high degree of autonomy and operate in silos according to their own logic, which is detrimental to the overall effectiveness of the armed forces. To remedy this shortcoming, a post of Chief of Defence Staff (CDS) - which can be translated as Chief of Defence Staff - will be created in 2019. The aim of this structural transformation is to strengthen the integration of the armed forces. Previous governments had repeatedly postponed this reform, no doubt fearing that the supremacy of the civilian over the military would be called into question. One of the mandates of the first CDS is to create joint commands in the Indian armed forces' theatres of operations.

The Modi government also wants to transform its military equipment procurement policy and significantly develop the country's defence industrial base. Over the past four decades, India has been the world's largest importer of weapons. Deploring this dependence on foreign equipment, particularly for critical technologies, the Modi government is promoting the idea of a form of military self-sufficiency, as part of a wider ambition often summed up by the notion of a "defence state". Atmanirbhar Bharat ; an «autonomous India» in French. The aim is to strongly encourage research and development and local arms production. Several emerging technologies in areas such as cyberspace, space, artificial intelligence (AI), hypersonic technology and robotics are specifically targeted. While Indian military institutions used to be somewhat wary of the private sector, the initiatives launched in recent years have favoured both public and private defence companies. In addition to equipping the Indian armed forces, the government is encouraging local industries to export their products. The BrahMos supersonic cruise missile is an example of an Indian-built export. In 2022, the Philippines signed a $375 million contract to acquire this weapon, co-developed by an Indian government agency and a Russian defence company.

With the aim of limiting dependency and promoting «strategic autonomy», India has also been diversifying its sources of supply for the military equipment it continues to import in recent years. In a multi-alignment approach that is independent of the ideologies of each partner, New Delhi is strengthening its partnerships with the United States, France and Israel, without cutting ties with its key partner Russia. As highlighted below, the country now buys defence systems from many countries.

India is pursuing its stated objective of building a technologically advanced, combat-ready army capable of conducting integrated, multi-domain operations. Numerous other military reforms are being carried out under the Modi government with this in mind, and the initiatives undertaken can be considered the most extensive in India's contemporary history.

Analysis - Progress, but limits

This desire for military transformation can easily be explained by New Delhi's growing desire to be recognised as a major world power, as well as by the heightened competition between India, China and Pakistan, three countries with nuclear weapons. Although the Indian army has developed and modernised in recent years, there are still shortcomings.

Firstly, the increase in India's defence budget and manpower must be put into perspective. The two figures below show the evolution of Indian spending in the sector, not in absolute terms, as in Figure 2, but as a percentage of India's gross domestic product (GDP), in Figure 5, and of the country's government spending, in Figure 6.

This observation needs to be qualified. It is true that Indian spending has risen sharply in recent years, but at a slower rate than the country's overall wealth, and the government is allocating less and less of its resources to defence. Despite declarations making the modernisation of the armed forces a priority, military spending as a percentage of GDP is now at historically low levels. A similar observation can be made with regard to military personnel. The graph below shows that these are not growing any faster than the Indian population as a whole, with the result that the percentage of people in the armed forces remains stable.

Military budgets and manpower show that, despite the Modi government's announcements, the share of resources allocated to defence has not really increased. In addition to these general observations, there are a number of other limitations, presented here in a non-exhaustive manner, that can be noted with regard to the Indian army's desire to grow in strength. The first concerns the structure of the defence budget. A major share of resources is currently allocated to salaries and pensions to the detriment of capital expenditure, and therefore equipment. In the 2025-2026 defence budget, for example, only 26.4 % of funds are earmarked for procurement, while 23.6 % are allocated to pensions. The government has recently tried to alleviate this problem by introducing short contracts in the army. However, there is a risk of having less experienced soldiers in the armed forces.

As a logical corollary of this low relative capital expenditure, and despite massive imports and investment in a national defence industrial base, the effectiveness of the Indian army today remains hampered by the obsolescence of a large proportion of the equipment it possesses. A 2018 parliamentary report considers that 68 % of military equipment is old, 24 % is current and 8 % is state-of-the-art. A 2023 update considers that, although the proportion of state-of-the-art equipment has almost doubled, it remains well below the needs of a modern army, and that half of the equipment is still old. For example, the armed forces are still using equipment dating from the Soviet Union, such as, until recently at least, fighter aircraft. Mikoyan-Gourevitch (MiG-21) Bison depicted below. Successful modernisation of India's military equipment will take decades.

The drive to create a solid defence industrial base has also been a partial success. According to official figures, national production increased by 174 % in the 2023-2024 financial year compared with the previous decade. Exports have also grown strongly in recent years. However, Indian defence equipment suffers from various problems, such as production delays, sometimes questionable quality and high prices. Generally speaking, low investment in research and development and a weak manufacturing sector are still hampering the development of local industries, which continue to lag behind technologically. This weakness in domestic defence production is undermining India's military strength. For example, the delayed delivery of the Tejas Mk1A fighter is hampering the combat readiness of the country's air force. Although the government wants to end all dependence on defence imports, Indian industry is struggling to meet the army's growing needs, forcing the country to continue buying foreign weapons. This policy of openness to a variety of suppliers can also create interoperability problems within the forces, given the incompatibility between the different communication protocols and software used. In the absence of a robust national defence industry, «strategic autonomy» thus remains an illusory objective for New Delhi.

These various limitations ultimately have a central consequence for India's defence: the existence of a growing gap between the capabilities of the Indian army and those of Pakistan and China combined, or of China alone. New Delhi must base its defence posture on the hypothesis of a war on two fronts at the same time, against both Islamabad and Beijing. Recent events very probably reinforce the perception of such a need. India and China will clash militarily on their border in 2020, while the last clashes between India and Pakistan date back to May 2025.^[1]. However, this desire to be able to hold two fronts simultaneously comes up against the reality of the relative military capabilities of these countries. While it is true that on paper India has greater resources than Pakistan, this is by no means the case with China, as the following graph illustrates.

The gap with China is large and growing. In 2014, India's defence budget was around 31 % that of China. In 2024, this figure will fall to around 26 %. Over and above these general figures, India's lag behind China can be seen, for example, in the field of advanced military technologies. There are major gaps in aviation - the current development of the J-36 stealth fighter by China is a prime example - cyber warfare and strategic communications systems, AI and drones. Unlike India, China has a large integrated industrial base, covering both the civil and defence sectors, enabling the country to manufacture cutting-edge military equipment. Beijing is also ahead of India when it comes to integrating its armed forces. One source mentions that, in private, Indian military officials acknowledge that they will not be able to compete with China for at least three decades.

Having long decoupled its national security interests from its economic interests, New Delhi is finally faced with a dilemma vis-à-vis China. India's economy is closely linked to that of its neighbour. Imports from China have exploded in recent years. India is particularly dependent on China for its cutting-edge technologies, such as computers and the components used in telecommunications equipment. This dependence on critical resources makes the Indian economy highly vulnerable in the event of a conflict with China.

Perspectives - Infinite military growth?

Although it has developed and transformed in recent years, the Indian army still suffers from shortcomings, particularly in terms of capabilities. How will the Indian forces evolve over the next few years? In a strategic context where India has to consider threats from both Pakistan and China, it is likely that the country's military spending will continue to grow. Recent crises highlight the importance of modernisation and investment in new technologies such as drones and cyber warfare for India.

The constant increase in defence spending is all the more likely in the future as the ability to use force is a marker of power that is strongly mobilised by the BJP. India's leaders are confident of their ability to deal with Pakistan and, despite the capability gap outlined above, play down the technological gap with China, which has been made a strategic priority. As India's image of itself as a great power grows, it is obliged to respond militarily to any future attack, so as not to appear weak, and must therefore increase its military resources. Indians today are more concerned about their country's place in the world than they were ten years ago, and acknowledging a power deficit vis-à-vis China would certainly damage the government's internal credibility.

With China steadily increasing its military spending, and Pakistan promising to do the same in the wake of the recent clashes over Kashmir, the risk today is that of an over-militarisation of Asia. Security dilemmas« are emerging. The idea behind this key concept in international relations theory is that a state that feels insecure may, in seeking to protect itself - notably by increasing its military capabilities - act in a way that creates a feeling of insecurity in another state, which will also want to act to increase its security. A vicious circle that can lead to war. In Asia today, there is a risk that these security dilemmas will form the basis of an arms race, both conventional and nuclear. The graph below shows the evolution of the number of nuclear weapons possessed by the three Asian rivals.

A nuclear arms race seems to be well and truly underway, with China in the lead. At a time when Pakistan and China are cooperating closely, the former buying most of its weapons systems from the latter, the question is whether India has a real interest in pursuing its quest for parity with its neighbours, or whether it would be preferable for the country to adopt a more pragmatic stance by refocusing its strategy on specific types of aggression.

[1] See the News sheet 27 for an analysis of the recent conflict between India and Pakistan.

To find out more

Desai, Hely. «Beyond Comparisons: India's Strategic Reckoning Amid China's Military Modernization. War on the Rocks, 9 April 2025

Krepinevich, Jr, Andrew F. «A Nuclear Collision Course in South Asia». Foreign Affairs, 26 May 2023

Rawat, Rahul. «Modi 3.0: Six Defense Sector Reforms Key to National Security. Stimson Center, 8 July 2024

The Economist. «Narendra Modi Is Remaking India's 1.4m Strong Military». 29 November 2023

Bibliography

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