Indian Economy News & Discussion - Nov 27 2017

[Vayutuvan]

If one uses inflation as a parameter, Rs 100 in 2014 is Rs 173.45 today. So an increase yes but not 3 times.

Mind you this does not include the increasing cost of pensions which eats into what is really available.

Inflation in India is one part. The other part is INR weakening against the dollar. Since we import a lot of defense equipment, that also has to be taken into account.

[A_Gupta]

https://www.indiabudget.gov.in
Demand 21 - Defense Capital outlays, page 77 of the budget document.

[A_Gupta]

Page 78:

[A_Gupta]

page 79:


Also on my India Indicators blog:
https://india-indicators.blogspot.com/2 ... 25-26.html

[Vayutuvan]

“Other equipment” in all three branches is the most spend.

[uddu]

Cross posting from Modi 3.0
Borge Brende: 'India Is Contributing To 20 Percent Of The Overall Global Growth' | Davos 2026
World Economic Forum President Borge Brende joins India Today at Davos 2026 to discuss the most complex geopolitical landscape since 1945. Amidst escalating tensions between Europe and the US over Greenland and ongoing trade disputes, Brende highlights the resilience of global growth, now exceeding 3%. He specifically notes India's rising economic self-confidence, describing it as the fastest-growing large economy contributing significantly to global expansion. Brende suggests that while geopolitics are increasingly fragmented, 'cooperation in a very competitive world' remains possible. He expresses hope for a resolution to the Ukraine conflict in 2026 and discusses the potential for an India-EU trade deal. The conversation also covers the impact of frontier technologies like AI as new growth engines and the risks posed by global debt bubbles and 'black swan' events like cyber warfare.

[uddu]

LIVE: IMF Lifts India's GDP Growth Projection to 7.3 Per Cent for Financial Year 2026 | N18G
The International Monetary Fund raised its forecast for India's economic growth in fiscal 2026 by 0.7 percentage points to 7.3%, citing strong momentum, but said growth is likely to slow to 6.4% in the following two fiscal years as cyclical factors fade.
The upgrade follows a revision earlier this month by India's National Statistics Office, which raised its estimate for growth to 7.4% in the year ending March 31, above the government's initial projection of 6.3% to 6.8%.

[uddu]

Cross posting from Modi 3.0
Why RBI wants BRICS to link digital currencies and how it would work | Business News
Big De-dollarisation Move? RBI Pushes To Link BRICS’ Digital Currencies Ahead Of 2026 Summit: Report
India’s central bank has quietly pitched a big idea: linking the digital currencies of BRICS nations. The aim is to make cross-border trade cheaper, faster, and less dependent on the US dollar. But how realistic is this plan, and could it actually reshape global payments? Here’s what’s really at stake.


RBI Pushes To Link BRICS’ Digital Currencies Ahead Of 2026 Summit: Report
The Reserve Bank of India (RBI) has proposed linking the official digital currencies of BRICS nations to make cross-border trade and tourism payments smoother, reported news agency Reuters.

[uddu]

Cross posting from Modi 3.0
What Sectors Drove The ₹16 Lakh Crore Worth Of MoU? | Maharashtra | Davos 2026 | Devendra Fadnavis
What Sectors Drove The ₹16 Lakh Crore Worth Of MoU? | Maharashtra | Davos 2026 | Devendra Fadnavis
At the World Economic Forum (WEF) in Davos 2025, Maharashtra secured approximately ₹16 lakh crore (₹15.70 lakh crore) in investment commitments through 54-61 Memorandums of Understanding (MoUs), projected to create 16 lakh jobs, with significant focus on AI, data centers, renewable energy, and manufacturing, boosting India's appeal as an investment destination. Key deals included Reliance's massive investment and a major lithium battery project, signaling Maharashtra's push for technological leadership and $1 trillion GDP.

[vijayk]

[A_Gupta]

PMI indices are healthy!

Code: Select all

Friday January 23 2026         Actual   Previous  Forecast      
HSBC Composite PMI Flash       59.50    57.80     57.5              
HSBC Manufacturing PMI Flash   56.8     55.0      55.4       
HSBC Services PMI Flash        59.3     58.0      57.7

from: https://tradingeconomics.com/india/calendar

[Suraj]

Steel production for 2025 calendar year was 164MT, up 9.7% from 149.5MT in 2024. December saw an all time high 14.8MT. The year saw a total 3 months with production exceeding 14MT, but this is the first time it exceeded 14.5MT . We should soon see the first month of 15MT steel output.

For context,
* This is almost as much as all of Europe, including the EU27 UK, Turkey etc, who collectively produced 168MT in 2025. In 2026, India should exceed combined European steel output.
* Indian steel output is a long way more than combined north + south American output (148MT) in 2025.
* India now produces as much steel as the combined output of USA and Japan.
* The highest ever steel output in any year from the USA is 139MT in 1973 . The highest from USSR was 161MT in 1988. Their current figures as a lot lower. China is the only country to ever produce more steel than current annual Indian output.

[KL Dubey]

^^Some more points:

All growth in global steel industry is now driven single-handedly by Bharat.

Almost all our production is consumed domestically. We do export a modest amount of steel but also import an equally modest amount.

"Crude steel" production figures include both virgin and recycled steel. While the breakdown is unclear, up to 30% of global crude steel output is estimated to be from recycling.

[A_Gupta]

This is a GoI press release.

India's Index of industrial production records growth of 7.8% in December 2025
https://www.pib.gov.in/PressReleasePage ... g=3&lang=1

Industry momentum further strengthened in December 2025 as the Index of Industrial production rose by 7.8%, reaching its highest level in over 2 years, after registering a high growth of 7.2%(RE) in November 2025.

Growth in IIP in December 2025, is driven by across the board surge in Manufacturing (8.1%), mining (6.8%) and electricity (6.3%).

In Manufacturing, highest growth recording industries are “computer, electronic and optical products (34.9%)”, “motor vehicles, trailers and semi-trailers (33.5%)” and “other transport equipment (25.1%)”

[A_Gupta]

And:
https://www.pib.gov.in/PressReleasePage ... g=3&lang=1
Counting What Counts: Strengthening India’s National Accounts and Core Economic Statistics

Key Takeaways

Base year for GDP estimates being revised to 2022-23 to reflect new economic structures.

CPI base year is revised to 2024, updating the consumption basket and weights for both rural and urban households.

IIP is being revised to 2022-23, aligned with the new national accounts series.

Informal sector measurement has improved with quarterly QBUSE bulletins.

District-level estimation has become a core design feature across PLFS, ASUSE, and NSS surveys.

Public access to official data has been expanded through GoIStats, e-Sankhyiki, and the revamped Microdata Portal, supporting transparency and data reuse.

[uddu]

He is replying to Jairam Ramesh
https://x.com/i/status/2016565555889918355
@PiyushGoyal
Is this a story of “Sour grapes”?

It is interesting to see that those who could not take decisions because they had no connect with the people on the ground are today making a virtue of not doing anything. Our people have paid immense costs for this lost opportunity. Our country has lost valuable jobs, income and growth and people have rightly punished this inaction many times.

: What puzzles me is that when the whole world is calling it the “mother of all deals”, my friend thinks it is hugely hyped. Is the combined GDP of $25 trillion, combined global trade of $11 trillion and common market of 2 billion people, $33 billion of India’s labour-intensive exports going to zero on day 1 a hype? What is also unfortunate is that my friend missed a basic fact that we are both largely complementary economies. It is not a zero sum deal but a win-win deal which will power our economic growth and create plethora of opportunities for our businesses and people.

2⃣: I can say with confidence that our Government has taken up the issue of CBAM, interests of our exporters in steel, aluminium and all other sectors like no one ever has and identified pathways to find solutions. We have found creative ways of handling these complex and sensitive subjects through dialogue, trust and support with our partners rather than “my way or highway only” kind of immature, illogical and rigid positions.

3⃣: All countries, including India reserve their right to regulate for health and safety reasons. No one cedes them in a trade agreement. They are disciplined in a manner that they do not become unnecessary and unjustified impediment to trade. The ways to ensure that, are adequately provided for in the Agreement. IPR obligations are similar to what we have in TRIPS at the WTO. They emphasise flexibilities for public health, need for transfer of technology, recognise India’s traditional digital knowledge library project and preserve our policy on data exclusivity. The commitments in Services are as per India’s domestic regime and we hope that some of these capital-intensive sectors such as maritime and financial services will attract EU’s investment, technology and innovation and grow these critical infrastructure services, bringing more efficient, innovative services to our businesses and people.

4⃣: I hope that my friend can devote more time to understand the auto sector and what we are intending to do. Our quota based, premium segment focused and phased auto offer (with a time lag of 5 years for EVs from EIF) is with an intent to boost Make in India. Liberalising CKD imports will encourage EU’s OEMs to set up local assembly lines. This serves as a stepping stone, moving foreign OEMs from "importing" to "assembling" and eventually to "full localisation" as they build local supply chains. This brings high-end manufacturing processes, quality standards, and advanced R&D practices into the Indian ecosystem. It will also create new demand, benefits consumers by expanding choice with faster access to global models. It also enhances safety and tech standards.

5⃣: The point on refined fuel is linked to extraneous reasons. Our Trade Agreement with EU is a long-term strategic engagement based on trust and mutual respect which will strengthen our trade routes.

I only hope my friend will shed this negative and pessimistic approach which is unable to see our aspirational people raring to go out and do business with the world. Let’s work to open opportunities for them, rather than act as roadblocks in their quest for prosperity.

[drnayar]

Bharat Container Shipping Line (BCL)

Ever wondered how India’s logistics sector would transform if the country established its own national shipping line?
That transformation may soon become a reality. The Bharat Container Shipping Line (BCL), a national container shipping carrier initiated by the Indian government, is set to revolutionize the country’s maritime landscape. By reducing reliance on foreign-flagged vessels, BCL will not only give India greater control over its export-import (EXIM) trade but also significantly strengthen the domestic shipping industry. In this blog, we’ll explore how BCL is poised to reshape the future of Indian logistics, unlocking exciting new opportunities for importers and exporters, and positioning India to compete more effectively in the ever-evolving global market.

Why Bharat Container Shipping Line?
By establishing BCL, India aims to minimise reliance on foreign shipping lines, thereby gaining greater control over its maritime trade routes. The initiative seeks to mitigate risks associated with global trade disruptions, ensuring a more secure and self-reliant shipping infrastructure for India’s overseas import and export. Bharat Shipping Container Line is expected to operate a fleet of approximately 100 vessels, including chartered ships, catering to a significant portion of Indian exports.

Several countries operate their national shipping lines:
China’s COSCO Shipping Corporation – One of the world’s largest state-owned shipping companies, playing a crucial role in international maritime trade.
South African Shipping Company (SASCO) – South Africa’s planned national shipping initiative aimed at strengthening its maritime capabilities.
Emirates Shipping Line is a wholly government-owned shipping entity of the United Arab Emirates, playing a pivotal role in the country’s robust maritime infrastructure.
With BCL’s establishment, India is set to join these nations in strengthening its maritime infrastructure, offering enhanced oversight of trade routes and improving maritime security.

Benefits for Indian Importers and Exporters
The global container shortage during the pandemic led to soaring freight charges, severely impacting Indian exporters. BCL aims to mitigate such vulnerabilities by ensuring stable and secure shipping options tailored to the needs of Indian businesses.

Key benefits include:
Reduced Shipping Costs – A national carrier could lower shipping expenses for Indian exporters and importers, enhancing their competitiveness in global markets.
Improved Supply Chain Security – With India controlling its shipping routes, businesses will have greater reliability in trade logistics.
Fleet Expansion – The launch of BCL is set to begin with a fleet of 100 container vessels, initially concentrating on key trade routes across Asia, West Asia, and the Red Sea. There are also plans to expand services to Europe, Africa, and the Americas, further strengthening India’s global maritime reach.
The Bharat Container Line (BCL) is under development, the initiative is progressing as a public-private partnership, with the Indian government supporting it through a ₹25,000 crore Maritime Development Fund, although the official launch date has not been announced.

BCL’s success will largely depend on its ability to effectively execute operational strategies and compete with established global shipping giants. However, if it’s able to do so, it has the potential to significantly strengthen India’s position in global logistics. With the right focus, BCL is poised to drive substantial growth in India’s logistics sector, creating new opportunities for businesses and stakeholders across the supply chain.

https://dahnay.com/the-bharat-container ... logistics/

[vijayk]

Fiscal consolidation without compromising on public capex - in fact increasing the latter substantially - has been an incredible achievement of PM/FM. Primary deficit is almost down to zero.

Unfortunately, they have not been helped more by RBI MPC but that too is getting solved.

[A_Gupta]

Many of the things discussed here, all in one place:
GoI press release:
HIGHLIGHTS: ECONOMIC SURVEY 2025-26
https://www.pib.gov.in/PressReleasePage ... g=3&lang=1

Also see the slew of press releases from the Ministry of Finance, January 29th, via:
https://www.pib.gov.in/allRel.aspx?reg=3&lang=1

• Ministry of Finance
o INDIA’S GDP GROWTH FOR FY26 IS ESTIMATED AT 7.4 PER CENT DRIVEN BY THE DOUBLE ENGINE OF CONSUMPTION AND INVESTMENT
o HIGHLIGHTS: ECONOMIC SURVEY 2025-26
o PREFACE OF ECONOMIC SURVERY 2025-26
o A CALIBERATED FISCAL STRATEGY HAS ANCHORED ECONOMIC STABILITY AMID GLOBAL ECONOMIC TURBULENCE: ECONOMIC SURVEY 2025-26
o FROM STABILITY TO STRENGTH: GROWTH ACCELERATES ALONG WITH LOWER INFLATION
o RURAL INFLATION ON A DECLINING TREND FURTHER REDUCING RURAL STRESS;
o ASSET QUALITY OF SCHEDULED COMMERCIAL BANKS (SCBs) WITNESSES SIGNIFICANT IMPROVEMENT, RECOVERY RATE IN NPAs APPROXIMATELY DOUBLES FROM 13.2 PER CENT IN FY18 TO 26.2 PER CENT IN FY25
o INDIA'S MONETARY AND FINANCIAL SECTORS ROBUST DESPITE THE UNCERTAIN GLOBAL GEOPOLITICAL SCENARIO: ECONOMIC SURVEY 2025-26
o AMIDST CONTINUOUS SHIFTS IN TRADE POLICIES AND GLOBAL UNCERTAINTIES, INDIA’S EQUITY MARKETS EXHIBITED MEASURED YET RESILIENT PERFORMANCE: ECONOMIC SURVEY 2025-26
o INDIA’S INNOVATION PERFORMANCE STRENGTHENS STEADILY, GLOBAL INNOVATION INDEX RANK IMPROVES TO 38TH IN 2025 FROM 66TH IN 2019: ECONOMIC SURVEY 2025-26
o WORLD BANK RANKS INDIA AMONG THE TOP FIVE COUNTRIES IN TERMS OF PRIVATE INVESTMENT IN INFRASTRUCTURE AMONG LOW- AND MIDDLE-INCOME ECONOMIES
o INDIA’S INDUSTRIAL PERFORMANCE REMAINS ROBUST AS INDUSTRY GROSS VALUE ADDED GREW BY 7.0 PERCENT YEAR-ON-YEAR, IN REAL TERMS, IN THE FIRST HALF OF FY2025-26: ECONOMIC SURVEY 2025-26
o MICRO, SMALL, AND MEDIUM ENTERPRISES FORM THE BACKBONE OF INDIA’S INDUSTRIAL ECONOMY: ECONOMIC SURVEY 2025-26
o FROM STABILITY TO NEW FRONTIERS, INDIA’S SERVICES EXPORTS GROWTH MORE THAN DOUBLED FROM 7.6% IN THE PRE-PANDEMIC PERIOD (FY16-FY20) TO 14% DURING FY23-FY25
o INDIA SHOULD PRIORITISE DECENTRALISED, APPLICATION-DRIVEN SYSTEMS OVER CAPITAL-INTENSIVE FRONTIER MODELS TO AVOID FRAGILE DEPENDENCIES IN ARTIFICIAL INTELLIGENCE: ECONOMIC SURVEY
o INDIA REMAINS AS THE WORLD’S LARGEST RECIPIENT OF REMITTANCES, WITH INFLOWS REACHING USD 135.4 BILLION IN FY25
o INDIA’S EXTERNAL PERFORMANCE DEMONSTRATES RESILIENCE TO GLOBAL SHOCKS: ECONOMIC SURVEY 2025-26
o AGRICULTURE WILL BE CENTRAL TO ACHIEVING VIKSIT BHARAT, DRIVING INCLUSIVE GROWTH AND IMPROVING THE LIVELIHOODS OF MILLIONS: ECONOMIC SURVEY
o OBJECTIVE OF DOUBLING FARMER INCOME TO BE ACHIEVED THROUGH PRODUCTIVITY IMPROVEMENT AND POLICY AND INSTITUTIONAL INTERVENTIONS: ECONOMIC SURVEY
o INCREASE IN AGRICULTURAL INPUT QUALITY, FARM MECHANISATION, MARKET SUPPORT, CROP INSURANCE AND CREDIT LEAD TO HUGE POSITIVE OUTCOMES: ECONOMIC SURVEY
o STATE LEVEL INNOVATIONS IN AGRICULTURAL GOVERNANCE LEADING TO POSITIVE OUTCOMES: ECONOMIC SURVEY
o RURAL EMPOYMENT SCHEME MGNREGS REACHED ITS LIMITS AND WARRANTED REASSESSMENT IN LIGHT OF EVOLVING RURAL REALITIES: ECONOMIC SURVEY
o RAPID STRIDES IN RURAL INFRASTRUCTURE – INCLUDING ROADS, HOUSING, TAP WATER CONNECTION & DIGITAL CONNECTIVITY.
o INCLUSIVE GROWTH BASED ON SPIRIT OF ‘SABKA SAATH, SABKA VIKAS, SABKA PRAYAS, SABKA VISHWAS’ HAS YIELDED MEASURABLE GAINS FOR INDIA
o RIGHT SKILLING, ENTREPRENEURIAL SPIRIT AND GOVERNMENT INITIATIVES CONTINUE TO BRING DOWN UNEMPLOYMENT, SAYS THE ECONOMIC SURVEY 2025-26
o SKILLING INDIA RIGHT TO MAKE IT FUTURE READY: ECONOMIC SURVEY 2025-2026
o EDUCATION THE CORE PILLAR OF HUMAN CAPITAL AND CENTRAL TO SHAPING THE NATION’S GROWTH PATH TOWARDS VIKSIT BHARAT @2047 : ECONOMIC SURVEY 2025-2026
o HEALTHY POPULATION A KEY PILLAR TO ENSURE RESILIENT FUTURE: ECONOMIC SURVEY 2025-26
o SIGNIFICANT STRIDES MADE IN PENSION AND INSURANCE COVER PROVIDING SOCIAL SECURITY OVER THE YEARS
o INDIA IS FAR MORE URBAN IN ECONOMIC AND FUNCTIONAL TERMS THAN OFFICIAL DEFINITIONS SUGGEST: ECONOMIC SURVEY 2025-26
o TELE-DENSITY REACHES 86.76 % AND 5G SERVICES NOW AVAILABLE IN 99.9 % OF DISTRICTS IN THE COUNTRY
o ECONOMIC SURVEY PROPOSES DISCIPLINED SWADESHI FOR STRATEGIC RESILIENCE: A THREE TIERED FRAMEWORK FOR STRATEGIC INDIGENISATION
o “INDIA’S MOVEMENT FROM SWADESHI TO STRATEGIC RESILIENCE, AND FROM RESILIENCE TO STRATEGIC INDISPENSABILITY, CANNOT BE ACHIEVED THROUGH INSULATION ALONE”: ECONOMIC SURVEY 2025-26
o INDIA ADOPTS A DEVELOPMENT-CENTRED, WHOLE-OF-ECONOMY CLIMATE STRATEGY: INTEGRATES ADAPTATION, MITIGATION AND BEHAVIOURAL CHANGE WITHIN ITS DEVELOPMENT MODEL, SAYS ECONOMIC SURVEY 2025-26

[uddu]

Budget 2026 Live: FM Nirmala Sitharaman presents Union Budget 2026-27

[arshyam]

Lots of infrastructure in focus. Outlay increased to ₹12.2L crore (an earlier allocation, don't recall if it was for last year, was ₹11,11,111 crore).

New east-west DFC between Gujarat and WB, which will really help heavy (mineral and ore) freight movement in the JH-CG-OD area. Long overdue, I never really understood why this route was not considered along with the first two corridors when DFC was originally proposed.

More HSR corridors: southern triangle between Hyderabad-Chennai-Bengaluru, Mumbai-Hyderabad, and Delhi-Varanasi-Siliguri.

[rahulm]

What I could catch. Could be full of erros. Do your own verification.

Defence allocation up about 22% if I heard 1 analyst correctly.

Major customs reforms. NS, as she promised recently has gone after customs (and rifgtfully in my view) with a vengeance. Rudaali session for customs baboos. Watch matrimonial sites for coal face impact confirmation.

Mental health institute for North India.

So many schemes ...to attract (foreign capital). but who is going to fix up our streets an cities ? Do we plan on an inverse relationship between viksit bharat and garbage, broken cities, air index, livability etc?

Budget for trekking and hiking.

Tax for foreign tours reduced from 5% to 2% without any uparwala limit.

Tax holiday till 2047 for phoren data centre providing services to phoren as long as they also provide to India.

PLI for mobile and IT hardware Rs 1,527 Karod against RS 9,000 karod last year.

Tendu leaf (bidiwala) wins!! Bidi jalaike.

Imported Aircraft and microwave parts win.

Personal use items import duty reduced from 20% to 10%.

One commentator says - budget is short on equities and long on bonds. Quite imsightful.

7 new HSR proposed - Mumbai–Pune, Pune–Hyderabad, Hyderabad–Bengaluru, Hyderabad–Chennai, Chennai–Bengaluru, Delhi–Varanasi, and Varanasi–Siliguri.

Many waterways planned.

Fiscal discipline maintained.

[williams]

...

So many schemes ...to attract (foreign capital). but who is going to fix up our streets an cities ? Do we plan on an inverse relationship between viksit bharat and garbage, broken cities, air index, livability etc?
...

Why should the center micro-manage state, city and municipal issues? States get enough allocation to fix these and they can request for more funds if things are lacking. We need local administration to step up. Everything cannot be decided in Delhi.

[rahulm]

we need judical reforms. needed 20 years ago. No movement on that. Its a massve, gummed up log jam. I guess no votes in cleaning up judiciary and justice delivery as there are no votes in increasing livabiliy of cities which look like bombed out war zones with garbage.

[uddu]

Mental health institute for North India.

North East - Tezpur get NIMHANS. Second NIMHANS for the Nation.

[uddu]

Defence Budget 2026: Govt lifts defence spending to 11% of GDP, outlay jumps 21% to ₹5.95 lakh crore
https://www.cnbctv18.com/budget/defence ... 836777.htm
In the Budget 2026 presented on February 1, Finance Minister Nirmala Sitharaman raised India’s defence allocation, with higher spending expected on capital equipment, modernisation and domestic manufacturing.

India stepped up its defence spending in the Union Budget 2026, with Finance Minister Nirmala Sitharaman announcing an outlay of ₹5.95 lakh crore on February 1, up 21% from last year’s Budgeted ₹4.92 lakh crore allocation. The increase includes a 21% rise in overall defence capital expenditure, underlining the government’s emphasis on long-term capability building. As a result, defence spending has risen to 11% of GDP in FY26, from around 8% in the previous year.

[rahulm]

...

So many schemes ...to attract (foreign capital). but who is going to fix up our streets an cities ? Do we plan on an inverse relationship between viksit bharat and garbage, broken cities, air index, livability etc?
...

Why should the center micro-manage state, city and municipal issues? States get enough allocation to fix these and they can request for more funds if things are lacking. We need local administration to step up. Everything cannot be decided in Delhi.

I kind of agree. Our Swacch bharat (Khuli hawa hawai defecation) was also suppoed to be a local gobarmint issue but it reached such disguting and epidemic proportions that the centre has to take it by the scruff of its neck and its pretty much sorted now.

Issue is even Bhajpa cities are a livability mess. Just returned from India after a 4 week stay. Every year even bhajpa states get worse. I say even bhajpa because no hope from any other.

It has clearly reached a scale and proportion where Shriman Sanjeev Sanyal @ the Centre talks about it.

I dont know what the solution is. Since states are failing abysmally, maybe centre has to step in like ending hawa hawai defeaction. One of the benchmark yardsticks of viksitness are livable cities.

Goa, small state. Could be turned into a model state in livability. But gets worse ever year.

[pravula]

Defence Budget 2026: Govt lifts defence spending to 11% of GDP, outlay jumps 21% to ₹5.95 lakh crore
https://www.cnbctv18.com/budget/defence ... 836777.htm
In the Budget 2026 presented on February 1, Finance Minister Nirmala Sitharaman raised India’s defence allocation, with higher spending expected on capital equipment, modernisation and domestic manufacturing.

India stepped up its defence spending in the Union Budget 2026, with Finance Minister Nirmala Sitharaman announcing an outlay of ₹5.95 lakh crore on February 1, up 21% from last year’s Budgeted ₹4.92 lakh crore allocation. The increase includes a 21% rise in overall defence capital expenditure, underlining the government’s emphasis on long-term capability building. As a result, defence spending has risen to 11% of GDP in FY26, from around 8% in the previous year.

11% of GDP? this cant be right...

[nash]

Defence Budget 2025-26: 6.81 lakh crore
GDP: 357 Lakh crore
It gives around ~1.9 of GDP.

Defence Budget 2026-27: 7.85 lakh crore
estimated GDP: 392-394 Lakh crore
It gives around ~2+ of GDP.

https://x.com/ANI/status/2017860343985574101/photo/1

Overall increase: ~15%
Capex: 21.84%

I would say good budget indeed for Defense, need to continue with this to get to 2.5% of GDP.

[uddu]

Defence Budget 2026: Govt lifts defence spending to 11% of GDP, outlay jumps 21% to ₹5.95 lakh crore
https://www.cnbctv18.com/budget/defence ... 836777.htm
In the Budget 2026 presented on February 1, Finance Minister Nirmala Sitharaman raised India’s defence allocation, with higher spending expected on capital equipment, modernisation and domestic manufacturing.

India stepped up its defence spending in the Union Budget 2026, with Finance Minister Nirmala Sitharaman announcing an outlay of ₹5.95 lakh crore on February 1, up 21% from last year’s Budgeted ₹4.92 lakh crore allocation. The increase includes a 21% rise in overall defence capital expenditure, underlining the government’s emphasis on long-term capability building. As a result, defence spending has risen to 11% of GDP in FY26, from around 8% in the previous year.

11% of GDP? this cant be right...

Yup. Just posted it as it is. Was surprised myself and thought we became a country like Saudi Arabia or something for a moment.

[drnayar]

As Europe rearms, ‘Made in India’ is entering the EU’s defence equation | Euractiv

https://www.euractiv.com/opinion/as-eur ... -equation/

[drnayar]

11% of GDP? this cant be right...

Yup. Just posted it as it is. Was surprised myself and thought we became a country like Saudi Arabia or something for a moment.

Using an exchange rate of 1 USD = 81 INR:

Rs 7.8 lakh crore ≈ $96.30 billion USD else appxly 85 in current conversion rates , easily the 3rd or 4th largest defence budget in the planet

[uddu]

Yup. Just posted it as it is. Was surprised myself and thought we became a country like Saudi Arabia or something for a moment.

Using an exchange rate of 1 USD = 81 INR:

Rs 7.8 lakh crore ≈ $96.30 billion USD else appxly 85 in current conversion rates , easily the 3rd or 4th largest defence budget in the planet

4th. Was 6th last year. Probably overtook U.K and Germany if they did not raise their defense budget.

[ShauryaT]

11% of GDP? this cant be right...

11% of the Indian govt spend - and still about 1.5% of the forecasted GDP - if fully utilized.

[Manish_P]

Fall in INR against the dollar (default currency in defense) will lead to lesser acquisitions despite the hike in budget- especially since we will be spending a lot on imported high value items like aircraft, subs ?

[drnayar]

Using an exchange rate of 1 USD = 81 INR:

Rs 7.8 lakh crore ≈ $96.30 billion USD else appxly 85 in current conversion rates , easily the 3rd or 4th largest defence budget in the planet

4th. Was 6th last year. Probably overtook U.K and Germany if they did not raise their defense budget.

I think we get more bang per buck compared to western countries on our budget.. wonder if there is a ppp calculator for military spending , this would be 2nd or 3rd highest outlay. Also a calculator on how spending inside the country translates to wealth creation ?

[VinodTK]

X posting

Post Operation Sindoor push: Defence budget jumps 15% to Rs 7.85 lakh crore; what’s in the pipeline for India’s military

NEW DELHI: The Union Budget 2026 has set aside Rs 7.85 lakh crore for defence, marking a sharp 15 per cent jump from Rs 6.81 lakh crore last year, as the government sharpens its focus on military modernisation in the post Operation Sindoor security environment.

According to official figures, the defence outlay for 2026–27 stands at Rs 7,84,678 crore, compared with Rs 6,81,210 crore in the previous financial year. Of this, the capital outlay has been pegged at Rs 2,19,306 crore, while revenue expenditure stands at Rs 5,53,668 crore, including Rs 1,71,338 crore for pensions.

The armed forces will receive Rs 2.19 lakh crore for modernisation, with allocations including Rs 63,733 crore for aircraft and aero engines and Rs 25,023 crore for the naval fleet. The defence ministry has several major projects in the pipeline, including contracts for fighter jets, submarines, unmanned systems and helicopters.
In comparison, the capital outlay in 2025–26 was pegged at Rs 1,80,000 crore, later raised to Rs 1,86,454 crore at the revised estimate stage.


In her budget speech, finance minister Nirmala Sitharaman proposed exempting basic customs duty on components and parts required for the manufacture of civilian, training and other aircraft. She also announced the waiver of basic customs duty on raw materials imported for the manufacture of aircraft parts used for maintenance, repair or overhaul by defence sector units, a move expected to provide a boost to the defence aerospace industry.

Meanwhile, the defence services (Revenue) and Capital Outlay were allocated Rs 3,65,478.98 crore and Rs 2,19,306.47 crore, reflecting jumps of 17.24 per cent and 21.84 per cent, respectively.

In a boost to the defence sector, Sitharaman announced, “It is proposed to exempt basic customs duty on raw materials imported for the manufacture of parts of aircraft to be used in maintenance, repair or overall requirements by units in the defence sector.”

What’s in the pipeline for India’s defence in 2026–27

Rafale jets and Su-57: Two parallel paths for India’s future fighter fleet

India’s fighter aircraft pipeline for 2026–27 is being shaped by two parallel and strategically distinct tracks: a large-scale expansion of the Rafale fleet through indigenous manufacturing, and renewed technical talks with Russia on the fifth-generation Su-57, even as New Delhi keeps its long-term focus on homegrown programmes.

On the western front, the defence ministry is preparing to take up a Rs 3.25 lakh crore proposal to acquire 114 Rafale fighter jets from France, a deal that would become India’s largest-ever defence procurement if cleared. Under the proposal, most of the aircraft would be manufactured in India under a government-to-government agreement, with around 30 per cent indigenous content initially, a figure officials say could rise to over 60 per cent during production. The plan also includes 12 to 18 Rafales in fly-away condition to meet the Indian Air Force’s immediate operational needs. If approved, the deal would take the total number of Rafales in Indian service to 176, including 36 already inducted by the IAF and 26 Rafale-M jets ordered for the Navy. India has also sought integration of indigenous weapons and systems on the aircraft, though source codes will remain with the French side. The push comes amid reports that Rafales performed effectively during Operation Sindoor, particularly against advanced Chinese air-to-air missiles using the Spectra electronic warfare suite. France is also planning a maintenance, repair and overhaul facility for Rafale M-88 engines in Hyderabad, with Indian private sector participation.

Running in parallel is Russia’s renewed pitch for the Su-57, its fifth-generation stealth fighter, after years of dormancy following India’s exit from the earlier FGFA programme. Senior Russian aerospace officials have said that technical consultations with India are at an advanced stage, including discussions on licensed production of the export variant Su-57E in India at facilities currently manufacturing the Su-30MKI. According to United Aircraft Corporation CEO Vadim Badekha, the talks also cover maximum use of Indian industry and Indian systems, signalling Moscow’s attempt to re-enter India’s fighter ecosystem as New Delhi evaluates multiple options for future air combat capability. Russia has also offered assistance in India’s indigenous AMCA programme, positioning the Su-57 as both a near-term capability and a technology bridge.

Despite offers from both Russia and the United States, including the F-35, India continues to prioritise the Rafale for near-term induction while keeping discussions on fifth-generation platforms open. Officials indicate that the Indian Air Force’s future fighter fleet will likely rest on a mix of Su-30MKI upgrades, an expanded Rafale fleet, large-scale induction of LCA Mk1A, and the indigenous AMCA beyond 2035, with the 2026–27 budget cycle marking a decisive phase in shaping that trajectory.

Submarine development and Project 75(I): India’s $8 billion undersea capability leap

Project 75(I) is emerging as one of India’s most consequential defence programmes for 2026–27, with India and Germany close to signing an estimated $8 billion (around Rs 70,000–72,000 crore) deal to build six next-generation conventional submarines for the Indian Navy. Negotiations have reached an advanced stage and the pact is expected to be finalised by March-end, making it India’s largest-ever defence contract, surpassing even the 2016 Rafale deal.

The long-delayed Project 75(I) is designed to address the rapid ageing of India’s conventional submarine fleet and to strengthen maritime deterrence at a time when China and Pakistan are expanding their undersea presence in the Indian Ocean Region. The programme focuses on diesel-electric attack submarines fitted with fuel-cell-based air-independent propulsion (AIP), a capability that allows submarines to remain submerged for weeks rather than days, drastically reducing detection risks.

Under the proposed arrangement, Germany’s ThyssenKrupp Marine Systems (TKMS) will partner with Mazagon Dock Shipbuilders Ltd (MDL) to build all six submarines in India under the Strategic Partnership model. The selected platform is the German Type-214 Next Generation submarine, which edged out Spain’s S-80 Plus primarily due to the maturity and operational reliability of its AIP technology, acoustic stealth and lower lifecycle risk. Indigenous content is expected to begin at 45 per cent and rise to nearly 60 per cent by the final boat, in line with the government’s Make in India and Atmanirbhar Bharat goals.

The programme, approved by the defence acquisition council in 2014 and formally tendered through an RFP in July 2021, also envisages deep technology transfer, long-term industrial collaboration and the creation of a domestic submarine-building ecosystem. Beyond shipyards, the project is expected to benefit MSMEs through manufacturing of spares, sensors, combat systems and associated equipment, giving a sustained boost to India’s naval industrial base.

For the Indian Navy, Project 75(I) is a critical capability upgrade. India currently operates around a dozen Russian-origin submarines and six French-built Scorpène-class boats, even as undersea activity by China’s PLA Navy and Pakistan’s Navy intensifies across the Indo-Pacific. The induction of six advanced AIP-equipped submarines is expected to significantly enhance sea denial, surveillance and deterrence, reshaping the regional balance under the waterline.

The push behind Project 75(I) also aligns with India’s broader naval indigenisation drive. Under the Indian Naval Indigenisation Plan 2015–2030, 51 large vessels worth nearly Rs 90,000 crore are already under construction in Indian shipyards, with over 40 indigenous warships and submarines delivered since 2014. Against this backdrop, Project 75(I) stands out as the centrepiece of India’s undersea warfare roadmap for the coming decade.

Naval unmanned platforms and coastal security: India’s leap into autonomous maritime warfare
India’s coastal and near-sea security architecture is set for a major upgrade in 2026–27 with the induction of the country’s first autonomous weaponised unmanned fast interceptor crafts (FICs) into the Indian Navy, marking a decisive shift towards network-centric and unmanned maritime operations.

The Navy is preparing to deploy the first batch of two weaponised unmanned interceptor crafts, developed and manufactured entirely in India by Pune-based Sagar defence Engineering, with deployment planned along the western seaboard, according to official sources. The induction will place India in a select global club of nations capable of developing and operating weaponised unmanned vessel swarms, a capability that has so far been limited to a handful of advanced naval powers.

The Navy had placed an order for 12 such interceptor crafts under a contract signed on January 5, 2022, as part of the iDEX–defence Innovation Organisation framework, aimed at promoting indigenous defence technologies. Until now, the Navy has relied largely on Israel-made unmanned surface vessels, primarily restricted to mine counter-measure roles, making the FIC programme a major expansion in scope and capability.

The unmanned interceptor craft is equipped with a 12.7 mm gun for close-range engagements and has the capability to deploy short-range missiles and loitering munitions, allowing it to counter asymmetric maritime threats, fast attack boats and hostile surface targets. A key operational advantage lies in its swarm capability, where multiple crafts can be controlled from a single command-and-control station, enabling force multiplication while significantly reducing risk to human operators.

One of the most critical features of the platform is its ability to operate in a GPS-denied and electronic warfare environment. Advanced navigation and control systems allow the craft to continue missions even when satellite signals are disrupted, ensuring resilience during high-intensity conflict scenarios. With an endurance of over 48 hours at sea, the craft provides sustained surveillance and patrol capability, strengthening maritime domain awareness along India’s extensive coastline.

Despite being unmanned, the interceptor craft retains operational flexibility, with the ability to carry more than 14 personnel for specific missions, including special operations, rapid insertion, evacuation or boarding tasks. Its layered weapons architecture and operational range of over 400 nautical miles, or roughly 800 km, make it suitable for extended patrols, coastal defence and quick-response roles in sensitive maritime zones.

The induction of these autonomous interceptor crafts aligns with India’s broader push towards self-reliance in defence manufacturing and reflects a strategic pivot towards autonomous, networked and unmanned warfare, an area increasingly shaping modern naval doctrine. As the Navy expands its unmanned surface fleet in the coming years, such platforms are expected to play a central role in securing India’s coastline, ports and offshore assets while redefining maritime operations in the Indian Ocean region.

Capital outlay fuels modernisation, indigenisation across air, land and sea

The Union Budget 2026 sharpens India’s defence modernisation push, with higher capital outlay directed towards missiles, UAVs, next-generation drones, advanced radars, air defence systems and network-centric warfare capabilities. Customs duty exemptions on aircraft components and raw materials for maintenance, repair and overhaul are expected to lower costs, attract private investment and deepen the domestic aerospace ecosystem under Make in India. Since January 2025, the Defence Acquisition Council has approved capital acquisitions worth over Rs 3.84 lakh crore, spanning missiles, electronic warfare systems, drones, artillery, armoured vehicles and air defence platforms across all three services.

Naval expansion, helicopters and frontline systems get major boost

India’s maritime and expeditionary capabilities are set to expand after the DAC cleared procurement proposals worth around Rs 79,000 crore, including large amphibious warships, landing platform docks, naval guns and support vessels, alongside anti-tank missiles, high-mobility vehicles and long-range drones. The modernisation roadmap also prioritises 156 Light Combat Helicopters (LCH) Prachand for the Army and Air Force, designed for high-altitude operations with over 65% indigenous content, as well as expanded induction of armed drones, surveillance UAVs and counter-drone systems. Smaller but critical deals, including 4.25 lakh carbines for the Army and 48 heavyweight Black Shark torpedoes for the Navy, are aimed at closing frontline capability gaps.

Indigenous aerospace, missiles and manufacturing ecosystem gathers momentum

India’s long-term air combat plans remain anchored in indigenous programmes led by the LCA Tejas Mk1A and the Advanced Medium Combat Aircraft (AMCA). Contracts for 97 additional LCA Mk1A jets, featuring over 64% indigenous content, are in place with deliveries from 2027–28, while the AMCA execution model has opened development to both public and private Indian firms. HAL has expanded production capacity by operationalising a third LCA Mk1A line and a second HTT-40 trainer line, raising Tejas output to 24 aircraft annually. Parallelly, ammunition self-reliance has accelerated, with 32 variants worth Rs 15,899 crore offered for long-term domestic production, most expected to be indigenised by 2027–28. The BrahMos Integration and Testing Facility in Lucknow has begun missile dispatches, reinforcing India’s end-to-end missile manufacturing capability. Overall, 193 defence contracts worth over Rs 2.09 lakh crore were signed in 2024–25, with 92% awarded to domestic industry, marking a decisive shift towards a robust public-private defence manufacturing ecosystem.

From: Times Of India

[Supratik]

This is a maintenance budget as most of the reforms in IT, GST and labor codes have already been done. Nothing fancy needed at this stage. Some regulation has been eased in IT and customs. F&O taxation increase is to prevent too much speculation in the markets as a lot of bad investors are loosing money.

[saip]

Rahulm, I worked in Goa decades ago. Then it was beautiful and VERY CLEAN. But not anymore.