India vs China: How Big Is the Defence Budget Gap and What It Means?

China has announced a 7.2% increase in its annual defence budget, raising its official military expenditure to over $245 billion. This development, revealed during the National People’s Congress, underscores Beijing’s focus on expanding its military strength amid growing geopolitical tensions.

Despite maintaining the same percentage increase as the previous year, experts argue that China’s actual military spending is significantly higher than what is declared. According to a news report, China’s real defence budget could be 40-50% more than official figures, as funds are often allocated under different categories to obscure actual expenditures.

Even with declared figures, China’s defence budget is more than three times India’s $79 billion allocation and second only to the United States, which has set aside over $900 billion for military spending in 2025.

India’s Defence Spending: Falling Short of Strategic Needs?

India’s total budget for 2025-2026 stands at $580 billion (₹50.65 trillion), with estimated revenue at $400 billion (₹34.96 trillion). However, India’s defence allocation remains at 1.9% of GDP, significantly lower than the 2.5% recommended by defence experts for a credible deterrent against China and Pakistan.

As per reports, analysts argue that India should increase its defence spending to at least 2.5% of GDP to effectively address operational voids and modernise its forces. Currently, a significant portion of the defence budget—nearly 75%—is absorbed by salaries, pensions, and operational costs, leaving limited funds for acquiring advanced military assets.

China’s Military Modernisation: Strengthening the PLA

China’s massive military expenditure is primarily directed towards modernising the People’s Liberation Army (PLA), which has over 2 million active personnel. The primary objectives include:

• Challenging US military dominance in the Indo-Pacific.
• Preventing foreign intervention in Taiwan.
• Strengthening control over disputed territories, particularly the South China Sea and the Line of Actual Control (LAC) with India.

Despite disengagement efforts in eastern Ladakh, PLA troops remain stationed along the LAC, with no significant de-escalation in sight.

India’s Struggle to Keep Pace with Modernisation

India’s financial constraints and legacy defence structures have led to gaps in critical military capabilities. While China rapidly advances in space warfare, cyber warfare, nuclear deterrence, and high-tech weaponry, India is still grappling with modernisation challenges.

Indian Air Force: The Need for Urgent Upgrades

The Indian Air Force (IAF) operates just 30 fighter squadrons, well below the sanctioned strength of 42.5. The reliance on ageing aircraft, combined with delays in indigenous Tejas fighter production, has widened the airpower disparity with China.

Meanwhile, China has stationed its J-20 fifth-generation stealth fighters at airbases near India and is already working on sixth-generation fighter prototypes. Additionally, China is expected to supply 40 J-35A stealth jets to Pakistan, further complicating India’s security landscape.

China’s Expanding Naval Power

China now commands the world’s largest navy, with over 370 warships and submarines. Though not as technologically advanced as the US Navy, its sheer numbers pose a significant challenge in the Indo-Pacific region.

Beijing is also actively supporting Pakistan’s naval expansion. Through the ‘Sea Guardian’ bilateral exercises, China and Pakistan are enhancing their maritime capabilities, reinforcing their strategic partnership in the Indian Ocean.

The Growing Nuclear and Cyber Warfare Threat

China continues to expand its nuclear arsenal while aggressively developing its cyber warfare capabilities. India, on the other hand, faces the dual challenge of maintaining a credible nuclear deterrent while strengthening its cybersecurity infrastructure against increasing cyber threats.

A Widening Gap: The Road Ahead for India

China’s military build-up and alliance with Pakistan present an increasing security challenge for India. While India has made progress in defence manufacturing and self-reliance, modernisation efforts remain slow due to budget constraints.

As Beijing strengthens its land, sea, and air dominance, along with advancements in cyber and space warfare, India faces mounting pressure to accelerate its defence preparedness.

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