India to continue spending more on defence: PM Modi’s economic adviser tells Firstpost

India will continue to step up defence spending in the coming years as geopolitical uncertainties intensify and countries increasingly prioritise security and self-reliance, S. Mahendra Dev, Chairman of the Prime Minister’s Economic Advisory Council (PM-EAC), told Firstpost.

Dev said the nearly 15 per cent increase in defence expenditure in the latest Union Budget should be seen in the context of a broader global trend, where major economies are ramping up military spending amid rising geopolitical tensions.

“Apart from the manufacturing push, everybody wants to produce their own. Defence is also becoming important. That way, the focus India is giving to defence expenditure and indigenous production of defence arms and equipment is understandable,” he said.

Addressing concerns over fiscal sustainability, Dev underlined that India’s fiscal consolidation remains on a credible footing, backed by a clearly articulated debt and deficit glide path. The debt-to-GDP ratio is projected to moderate to 55.6 per cent in FY27 from 56.1 per cent in FY26 (revised estimates), which is expected to ease interest payment pressures over time and create fiscal space for strategic expenditure.

“The fiscal deficit for FY26 (RE) has been maintained at 4.4 per cent of GDP, in line with the stated target. Consistent with renewed fiscal prudence, the fiscal deficit for FY27 (BE) is estimated at 4.3 per cent of GDP. In this setup, defence preparedness is a clear priority given the geopolitical situation, and resources have been mobilised for that in the budget,” Dev said.

He added that the higher defence allocation is unlikely to be a one-off. “This kind of expenditure, and even the step-up, will be visible in the coming budgets as well. It will be driven by geopolitical concerns. We need to expand for our own security,” Dev said.

Dev also highlighted that India’s defence strategy is closely linked to its broader push for domestic manufacturing. With countries increasingly seeking to reduce dependence on external suppliers for critical defence equipment, India’s focus on indigenisation is expected to strengthen alongside higher budgetary support.