India's defence spending has surged to its highest level in six years, with the Defence Ministry achieving a capital expenditure rate of 62% in the first eight months of the current fiscal year 2025-26. This marks a significant jump from the 41% recorded during the same period in the previous financial year 2024-25.
Milestone Payments and Emergency Acquisitions Drive Spending
Official data reveals that this accelerated spending is not just about routine procurement. A key driver is understood to be milestone payments for critical deals signed earlier, coupled with significant acquisitions made through the emergency procurement route. These emergency measures were activated following Operation Sindoor, launched by the Armed Forces in May 2025 in response to the Pahalgam terror attack on April 22 of that year.
Following the operation, the three services were tasked with identifying and fast-tracking necessary procurements within a six-month window until November 2025. By December 2025, the ministry had achieved approximately 80% capital expenditure, amounting to around Rs 1.2 lakh crore.
Breaking Down the Budget Numbers
Detailed budget analysis shows the scale of the increase. Of the total capital outlay of Rs 1,80,000 crore for 2025-26, the ministry spent Rs 1,11,374.67 crore until November 2025. Furthermore, it has utilised 67% of its total budget of Rs 6.81 lakh crore during this period, compared to 64% in the same period last year.
This trend represents a sustained upward trajectory. In 2023-24, the ministry spent 53% of its capital budget by November, compared to just 48% the year before. The current fiscal's performance is the strongest since 2019-20.
Major Deals Fueling the Capex Surge
The past year has seen several landmark defence contracts being inked, contributing substantially to the expenditure figures.
In a major boost for naval aviation, India and France signed an Inter-Governmental Agreement (IGA) in April 2025 for 26 Rafale-M fighter jets (22 single-seater and 4 twin-seater). The multi-faceted deal also covers training, simulators, weapons, performance-based logistics, and additional equipment for the Indian Air Force's existing Rafale fleet.
Subsequently, in June 2025, the Defence Ministry signed 13 contracts worth Rs 1,981.90 crore under the Emergency Procurement (EP) mechanism. These acquisitions were aimed at enhancing situational awareness, lethality, mobility, and protection for troops in counter-terrorism environments. The procured systems included:
- Remotely Piloted Aerial Vehicles (RPAVs) and drones
- Loitering munitions and counter-drone systems
- Very Short Range Air Defence Systems (VSHORADs)
- Advanced radars
Adding to the IAF's strength, a monumental Rs 62,370-crore deal was signed with Hindustan Aeronautics Limited (HAL) in September 2025. This contract is for the procurement of 97 LCA Tejas Mk1A aircraft, comprising 68 fighters and 29 twin-seater trainers, along with associated equipment.
The confluence of strategic emergency buys post-Operation Sindoor and the execution of planned, high-value capital acquisitions has clearly propelled India's defence modernisation spending to a new peak, underscoring a focused push towards enhancing operational readiness and self-reliance.
