The Indian Ministry of Defence intends to lift defence expenditure to 2.5% of gross domestic product in the next five-year plan, up from the current 1.9%, Defence Secretary Rajesh Kumar Singh said on 7 July. The ministry will seek the larger outlay in its submission to the 16th Finance Commission. Singh added that New Delhi aims to sign contracts worth about Rs 2 lakh crore during FY26, matching last year’s record, and has already cleared ten capital acquisition proposals valued at more than Rs 1.05 lakh crore. Roughly 75% of the capital budget is earmarked for domestic suppliers, covering sectors such as aerospace, shipbuilding, land systems, missiles and munitions. At the Defence Research and Development Organisation’s Controllers Conference in Delhi, Defence Minister Rajnath Singh warned that peacetime is an “illusion” and pressed officials to accelerate financial approvals. Citing Stockholm International Peace Research Institute data that pegs global military outlays at $2.7 trillion, he argued that India’s growing budget should be viewed as an economic investment. Singh said the performance of home-grown systems in May’s Operation Sindoor has spurred foreign interest and underscored plans to begin manufacturing large aero-engines domestically. Modernisation projects on the books include a Rs 65,000 crore upgrade of Sukhoi-30 MKI fighters over the next five years and the rollout of the first Light Combat Helicopter in fiscal 2027-28. Industry officials expect revenue growth of 8–10% while maintaining profit margins as these programmes gain traction.