India has announced it will set up a non-lapsable fund to invest more in the country’s defence modernisation

The fund comes just after the government allocated ₹1.60.000 Crores ($19.4bn) to the modernisation of the armed forces under its February 2023 Union Budget, which marked a 57% rise since 2019/20.

In accordance with the programs, the Indian Ministry of Defence (MoD) is expected to add main battle tanks, air defence gun systems, missiles, naval vessels, submarines, multi-role aircraft, transport helicopters, and attack helicopters to its existing fleet.

It also plans to upgrade its C4I2SR (command, control, communications, computers, intelligence, information, surveillance, and reconnaissance) systems, maritime surveillance, and anti-submarine warfare capabilities. While the Indian Army’s long delayed Future Infantry Combat Vehicle (FICV) programme is expected to be expedited, the MoD is also anticipated to speed up the Army’s Tactical Communication System program.

Indian defence spending to increase from $80.5bn to $97.7bn between 2024 and 2028, reflecting a compound annual growth rate (CAGR) of 5%. This contrasts with the slow CAGR of 3.6% since 2019 largely due to economic constraints.

Modernisation Ahead of Renewed Conflicts

The country’s decision to assign more funds to modernisation reflects the global trend of defence expansion as a means of security in an unstable geopolitical landscape.