Budget 2025: As Finance Minister Nirmala Sitharaman prepares to present the Union Budget 2025 on February 1, the defence sector anticipates significant announcements aimed at advancing India's strategic capabilities and self-reliance. This marks Sitharaman’s eighth Budget presentation and the second during Prime Minister Narendra Modi’s third term.
In the previous fiscal year, the Government allocated Rs 6.22 lakh crore to defence — a 4.79 per cent increase from the prior year — underscoring its commitment to modernisation and the ‘Atmanirbhar Bharat’ initiative. Experts believe the upcoming Budget could build on this trajectory with enhanced funding and reforms.
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High Hopes For Domestic Production, R&D
Sahil Luthra, Managing Director of Vijayan Trishul Defence Solutions, emphasised the importance of sustained investment in defence to reinforce national security and drive economic growth. “As we approach Budget 2025, the Defence industry remains hopeful for substantial investments aimed at reinforcing national security and promoting 'Atmanirbhar Bharat'," he said.
"Building on last year’s increased defence allocations, we anticipate a continued focus on domestic production, R&D funding, and private sector incentives. These measures will not only strengthen India’s strategic position but also contribute to economic growth by boosting exports and creating high-skill jobs," Luthra added.
"In a stable economic scenario, we look forward to a Budget that prioritises innovation and enhances self-reliance," he said, adding that innovation and collaboration between public and private players could define the sector’s growth path.
The sector is also demanding an allocation of 3 per cent of GDP. Kartik Ganapathy, Founding Partner of IndusLaw, said, "A defence budget allocation of 3 per cent of GDP could provide India with the resources to modernize its armed forces, enhance infrastructure in border areas, and invest in emerging technologies such as AI, cyber warfare capabilities, and advanced surveillance systems."
"Legal advisory services would be crucial in streamlining procurement processes and ensuring compliance with international laws and sanctions during such expansions," Ganapathy added.
Drone Industry: A Key Player In Defence Modernisation
The role of drone technology in defence was spotlighted by Major General (Dr.) Mandip Singh (Retd.), President of Strategic Alliances at DroneAcharya Aerial Innovations. He pointed out the transformative potential of drones, particularly their dual-use capabilities for both civilian and military purposes. “In fact, the drone ecosystem is emerging as a critical component of national power & could be a major driver of the Indian export market. The Government's support through favourable policies, increased funding for R&D, and incentives for domestic manufacturing can become the fuel to propel this engine of growth & export,” he remarked.
Major General Singh also called for measures to promote indigenous production of advanced drones under the ‘Make in India’ initiative. Proposals such as establishing dedicated drone parks and corridors, alongside simplifying business processes for drone startups, could position India as a global leader in this emerging technology.
As the defence sector awaits the Union Budget 2025, industry leaders remain optimistic that the Government will introduce measures to enhance self-reliance, drive innovation, and strengthen India’s position as a global defence player.