China hikes defence budget by 10 per cent to USD 275 billion
China has announced a 7 per cent increase in its defence budget for 2026, setting military spending at roughly 1.9 trillion yuan (around USD 275 billion) about USD 25 billion more than last year’s allocation. The figure was presented by Premier Li Qiang in the government work report to the National People’s Congress, which also outlined broader economic targets including a 4.5 per cent to 5 per cent GDP growth goal amid domestic and global headwinds.
China’s defence budget continues its steady expansion, marking the 11th consecutive year of single‑digit growth , but analysts note the 7 per cent rise for 2026 is slightly lower than the 7.2 per cent increases seen in recent years. Although Beijing states its military spending remains “comparatively modest” relative to GDP and per capita measures, the scale of investment underscores its ambition to modernise the People’s Liberation Army (PLA) by 2035 with capabilities spanning advanced naval platforms, missile systems, air power and emerging technologies. This boost comes amid heightened regional tensions especially over the Taiwan Strait and intensifying strategic competition with the United States.
In contrast, India’s defence budget for the financial year 2026–27 was set at ₹7.85 lakh crore (about USD 86–94 billion) , marking a 15.19 per cent increase over the previous year’s estimates and the largest allocation ever for the Ministry of Defence. This total accounts for roughly 2 per cent of India’s GDP and nearly 15 per cent of total central government spending . A breakdown of the allocation shows about ₹2.19 lakh crore earmarked for capital expenditure a record high with a further ₹1.85 lakh crore allocated specifically for capital acquisitions such as aircraft, ships, missiles, drones and other defence systems.
A key emphasis in India’s budget is on accelerating domestic defence manufacturing under the “Make in India” initiative. Around 75 per cent of capital acquisitions are earmarked for procurement from Indian industries, a significant boost to self‑reliance and the defence industrial base. Other notable allocations include a substantial increase in healthcare support for ex‑servicemen under the Ex‑Servicemen Contributory Health Scheme and a continued rise in funding for defence research and development.
Despite these increases, India’s budget remains much smaller in absolute terms than China’s roughly one‑third the size reflecting structural differences in fiscal capacity and strategic prioritisation. A longstanding challenge for India has been the high share of the budget committed to salaries, allowances and pensions , which together account for a significant portion of total defence expenditure. In the 2026–27 budget, about 26.4 per cent is for pay and allowances and 21.8 per cent for defence pensions , limiting the portion available for modernisation and new capability acquisition.
Strategic analysts note that both countries face evolving security challenges, but their budgetary priorities differ in scale and composition. China’s vast outlay and long‑term growth support comprehensive force modernisation across land, sea, air and emerging domains including cyber and space. India’s budget, while growing strongly, must balance operational readiness, personnel commitments and capital acquisitions , with an increasing push to develop indigenous technology and industry.