Hello, this is Priyanka Salve writing from Singapore.
Welcome to the latest edition of Inside India. A one-stop-shop for the stories and developments of the world’s fastest growing large economy.
India, the world’s fifth-largest military spender, has contentious relations with its two nuclear-armed neighbors, China and Pakistan. Last year, New Delhi carried out military strikes against Pakistan’s alleged terrorist infrastructure, and last week Indian officials acknowledged there had been clashes on the border with China.
Amid rising border tensions, India this week announced plans to spend billions of dollars on modern warfare equipment. Who will receive the goods from?
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big story
India, the world’s second-largest arms importer, is pouring billions of dollars into modernizing its military to counter the technological advances of neighboring China, with which it shares an uneasy peace.
Indian military officials said last week that clashes with Chinese soldiers continued at several locations along India’s northeastern border.
Shatrugjeet Singh Kapur, chief of the Indo-Tibetan Border Police, a division of India’s central military, also called China the “biggest enemy” and called for modernization of defense equipment. “It will be difficult to compete with China in traditional ways,” Kapur said.
Following Mr. Kapoor’s comments, India on Monday approved spending 2.12 trillion rupees ($22 billion) to modernize its defense equipment. The country plans to spend on long-range suicide drones, surveillance and attack systems, anti-drone technology, short-range air defense, artillery, helicopters and naval platforms.
Indian soldiers carry a drone after displaying weapons and drones used in Operation Sindur during the Know Your Army program ahead of Republic Day in Baramulla, Jammu and Kashmir, India, January 25, 2026.
Null Photo | Null Photo | Getty Images
Experts told CNBC that New Delhi increasingly views China as a threat, especially given China-Pakistan’s military ties, and the purchase is aimed at closing the technology gap with China.
“The situation in the India-China border area is occasionally disrupted as Chinese troops deviate from their established patrol patterns,” a spokesperson for India’s Ministry of External Affairs said on Friday. In response, the Chinese government said, “China will strictly abide by the relevant agreements and common understandings agreed upon between the two countries.”
India’s military policy is primarily driven by its long-running conflict with Pakistan and the “increasing perception of China as a threat,” Peter Wezemann, a senior fellow at the Stockholm International Peace Research Institute, told CNBC.
According to a SIPRI report earlier this year, 61% of China’s arms exports were supplied to Pakistan between 2021 and 2025.
Wezeman said India’s latest weapons purchases include importing artillery parts and technology from South Korea, helicopter engines and avionics from France, and unmanned aircraft from the United States and Israel.
Considering India’s need to improve its technology, cooperation with Russia and Japan may also be considered.
Foreign partnerships
Citi said in a report on Tuesday that India has given the go-ahead for military spending totaling 3.7 trillion rupees since April, more than 50% of the 6.73 trillion rupees worth of approvals for the fiscal year ending March 2026, the highest in a decade.
New Delhi says it plans to source 82% of its defense equipment from local industry, but foreign companies are likely to play a key role in providing technology essential to military modernization.
Arpit Chaturvedi, South Asia advisor at strategic advisory firm Teneo, told CNBC that foreign partnerships remain important for technologies that India does not yet produce on its own. He explained that India relies on imported technology for specialized components such as aircraft engines, propulsion systems, sensors and electronic subsystems.
“American, Israeli and Russian defense manufacturers are likely to find significant opportunities in India’s expanding defense market through joint ventures, co-production and technology partnerships with Indian companies,” Chaturvedi said.
According to SIPRI, India was the world’s second-largest importer of major weapons from 2021 to 2025, accounting for 8.2% of total global imports, although its dependence on overseas suppliers decreased by 4% over the same period due to improvements in local design and production capabilities.
New Delhi is also the world’s fifth-largest military spender at $92 billion, but this is less than 30% of China’s military spending and about one-tenth of the United States, SIPRI’s Wesman said.
While India faces practical challenges in matching China’s military modernization scale, the Middle East and Ukraine conflicts show that mass-produced systems like drones can address asymmetries, said Colin Ko Swee Lean, a senior fellow at Nanyang Technological University in Singapore.
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