Post-Sindoor Defence Policy and Budgetary Response: UPSC Current Affairs Story Arc

Overview

This arc tracks India's decisive shift toward total defence self-reliance following the 'Operation Sindoor' conflict in mid-2025. The narrative begins with a reactive policy change—reserving 75% of procurement for Indian firms—which was quickly formalized into a long-term 15-Year Modernisation Plan (2025–2040). This plan prioritizes 'next-gen' warfare tech like AI, space-based systems, and unmanned platforms. The arc culminates in the FY2026-27 budget, where the government backed these strategic ambitions with a record-breaking ₹7.85 lakh crore allocation, specifically addressing the infrastructure and technological gaps exposed during the conflict.

How This Story Evolved

Policy shift announced post-conflict (Item 1) → Formalized in Strategic Plan (Item 5) → Funded and implemented in Budget (Seed)

1. 2025-08-22: India's defence procurement to cross Rs 2 lakh crore in FY25
   More details

   UPSC Angle: India's defence procurement to cross Rs 2 lakh crore in FY25.

   Key Facts:

   • Defence procurement will cross Rs 2 lakh crore in FY25
   • 75% of the defence budget goes to Indian companies after Operation Sindoor
   • Defence budget is already Rs 6.21 lakh crore
   • Speaking at the Economic Times World Leaders Forum 2025
   • Theme: “Defence, Diplomacy, and Deterrence: Shaping India's Strategic Horizon.”
2. 2025-09-27: India's 15-Year Defence Modernisation Plan
   More details

   UPSC Angle: India's 15-Year Defence Modernisation Plan focuses on advanced technologies.

   Key Facts:

   • Plan duration: 2025-2040
   • Focus: AI, space-based warfare, unmanned systems, direct energy weapons
   • Budget FY2025-26: ₹1.72 lakh crore for capital procurement
   • Indigenous production allocation: 75 percent of capital procurement
3. 2026-02-04: Increased Capital Spending for Defence Sector in FY2026-27
   More details

   UPSC Angle: 15.2% hike in defence budget for FY27 to address tactical gaps.

   Key Facts:

   • Ministry of Defence total allocation: ₹7.85 lakh crore
   • Capital outlay increase: ~22%
   • Capital outlay total: ₹2.19 lakh crore
   • Domestic procurement target: 75% of capital acquisition budget
   • Domestic procurement amount: ₹1.39 lakh crore
   • BRO allocation: ₹7,394 crore
   • Total defence budget for FY2026-27: ₹7.85 lakh crore
   • Increase in capital outlay for new acquisitions: 22%
   • Capital outlay for FY2026-27: ₹2.19 lakh crore
   • Percentage of capital acquisition budget reserved for domestic industry: 75%
   • Amount reserved for domestic industry: ₹1.39 lakh crore
   • Allocation for Border Roads Organisation (BRO): ₹7,394 crore
   • Operation Sindoor conflict tactical gaps addressed
4. 2026-02-13: Defence Acquisition Council Approves Proposals Worth ₹3.60 Lakh Crore
   More details

   UPSC Angle: DAC approves acquisition proposals worth ₹3.60 lakh crore.

   Key Facts:

   • AoN proposals approved: ₹3.60 lakh crore
   • DAC formation: 2001, post-Kargil War (1999)
   • DAC Chairperson: Defence Minister
   • DAC is central to India's Defence Acquisition Procedure (DAP) 2020
5. 2026-02-13: DEFSAT 2026: Defence-Space Forum for Industry Expansion
   More details

   UPSC Angle: DEFSAT-2026: Defence-Space Forum for Industry Expansion.

   Key Facts:

   • DEFSAT-2026 to take place between February 24 and 26 in New Delhi
   • India's defence budget of Rs 7.85 lakh crore for FY 2026–27, a 15% increase
   • Rs 2.19 lakh crore earmarked for capital outlay
   • Rs 1.39 lakh crore reserved for procurement from domestic defence industries
   • DRDO allocation has also risen to Rs 29,100.25 crore
6. 2026-02-17: Private Sector's Rising Contribution to India's Defence Output
   More details

   UPSC Angle: Private sector contributes ~25% of India's defence production.

   Key Facts:

   • Private sector contributes nearly one-fourth of India's total defence production
   • Reforms include corporatisation of Ordnance Factories and liberalised investment schemes
7. 2026-02-22: Record defense budget focuses on AI and self-reliance.
   More details

   UPSC Angle: India's FY27 defense budget focuses on AI and self-reliance.

   Key Facts:

   • FY27 defense budget: approximately $93.5 billion (₹7.85 lakh crore).
   • Capital expenditure increase: 21.8%.
   • Capital expenditure total: over $26.1 billion (₹2.19 lakh crore).
   • Allocation for AI and autonomous systems: approximately $9.8 billion (₹82,217 crore).
   • Pension allocation: approximately $20.4 billion (₹1.71 lakh crore), 21.84% of the budget.
   • Pay and allowances: $24.7 billion, 26.40% of the budget.

Genesis

Trigger

Operation Sindoor (mid-2025). While the full details of the conflict are classified, it served as a 'tactical wake-up call' that exposed gaps in domestic supply chains and high-tech equipment.

Why Now

The conflict proved that reliance on foreign OEMs (Original Equipment Manufacturers) during active hostilities creates strategic vulnerabilities. The 'Defence, Diplomacy, and Deterrence' theme at the August 2025 World Leaders Forum signaled this shift to the global community.

Historical Context

Connects to the 'Atmanirbhar Bharat' (Self-Reliant India) initiative launched in 2020 and the previous 'Positive Indigenisation Lists' (PILs) which gradually restricted defence imports.

Key Turning Points

1. [2025-08-22] Announcement of 75% domestic procurement reservation

   It moved indigenization from a 'preference' to a 'mandate' for the majority of the budget.

   Before: High reliance on foreign imports for critical systems. After: Domestic industry is the primary stakeholder for 3/4ths of the procurement budget.

2. [2025-09-27] Formalization of the 15-Year Modernisation Plan

   It provided a technology roadmap (AI/Space) beyond traditional hardware.

   Before: Piecemeal acquisitions. After: Long-term strategic focus on advanced disruptive technologies.

Key Actors and Institutions

Key Institutions

• Ministry of Defence (MoD)
• Border Roads Organisation (BRO)
• Ministry of Finance
• Defence Research and Development Organisation (DRDO)

Key Concepts

Capital Outlay

Budgetary allocation used for the acquisition of new assets like weapons, aircraft, and warships (unlike revenue expenditure which covers salaries and pensions).

Current Fact: Capital outlay for new acquisitions rose by 22% to ₹2.19 lakh crore in the FY2026-27 budget.

Indigenization of Technology

The capability to design, develop, and manufacture high-tech equipment within the country to reduce import dependency.

Current Fact: The 15-Year Plan (2025-2040) shifts focus to indigenous AI, space warfare, and directed energy weapons.

Strategic Infrastructure

Fixed assets like bridges, tunnels, and roads in border areas that enable rapid troop mobilization during conflicts.

Current Fact: The BRO received an increased allocation of ₹7,394 crore for strategic tunnels and bridges in the latest budget.

What Happens Next

Current Status

As of February 2026, the policy is fully funded. The government has committed ₹1.39 lakh crore specifically for domestic capital procurement for FY2026-27.

Likely Next

Expect a surge in 'Acceptance of Necessity' (AoN) approvals for AI and drone startups, and the fast-tracking of strategic tunnels by the BRO in border states.

Wildcards

Potential slowdowns in R&D by domestic private players or geopolitical pressure from traditional suppliers (like Russia or France) whose market share is being capped.

Why UPSC Cares

Syllabus Topics

• Indigenization of technology and developing new technology
• Security challenges and their management in border areas
• Government Budgeting

Essay Angles

• Self-reliance as a prerequisite for Strategic Autonomy
• Modern warfare: Beyond boots on the ground to AI and Space

Prelims Likely: Yes

Mains Likely: Yes

Trend Signal: rising

Exam Intelligence

Previous Year Question Connections

• Functions of the Border Roads Organization (BRO) in strategically sensitive areas. — The arc shows a direct budgetary response to this role, increasing BRO funding to ₹7,394 crore for tactical gaps.
• Identification of indigenously built weapon systems (Rudra helicopter). — This arc represents the massive scaling of such indigenization efforts from single platforms to 75% of the entire budget.

Prelims Angles

• Specific percentage of capital procurement reserved for domestic industry (75%)
• Total allocation for Ministry of Defence in FY2026-27 (₹7.85 lakh crore)
• Technologies prioritized in the 15-year plan (AI, Space-based warfare, Directed Energy Weapons)
• The duration of the new Defence Modernisation Plan (2025–2040)

Mains Preparation

Sample Question: Discuss how the 15-Year Defence Modernisation Plan (2025-2040) and recent budgetary shifts reflect a transition in India’s security doctrine from 'Response-based' to 'Deterrence-based' self-reliance.

Answer Structure: Intro: Mention Operation Sindoor as a catalyst → Body 1: Explain the shift to 75% domestic procurement and its economic/security benefits → Body 2: Analyze the focus on AI/Space/BRO infrastructure as a fix for tactical gaps → Body 3: Challenges (R&D lead times, private sector participation) → Conclusion: Strategic Autonomy through technological sovereignty.

Essay Topic: Deterrence through Domesticity: India’s Path to Global Military Stature

Textbook Connections

Key Takeaway

India has transitioned from treating 'Atmanirbhar Defence' as a policy goal to an operational and budgetary mandate, fueled by the tactical lessons of Operation Sindoor.

All Events in This Story (7 items)

1. 2025-08-22 [Defense & Security] — India's defence procurement to cross Rs 2 lakh crore in FY25
   Defence Minister Rajnath Singh announced that India's defence procurement will cross Rs 2 lakh crore this year, with 75% of the defence budget allocated to Indian companies after Operation Sindoor. He was speaking at the Economic Times World Leaders Forum 2025 where the theme was “Defence, Diplomacy, and Deterrence: Shaping India's Strategic Horizon.” The defence budget is already Rs 6.21 lakh crore and will rise further after Operation Sindoor.
   More details

   UPSC Angle: India's defence procurement to cross Rs 2 lakh crore in FY25.

   Key Facts:

   • Defence procurement will cross Rs 2 lakh crore in FY25
   • 75% of the defence budget goes to Indian companies after Operation Sindoor
   • Defence budget is already Rs 6.21 lakh crore
   • Speaking at the Economic Times World Leaders Forum 2025
   • Theme: “Defence, Diplomacy, and Deterrence: Shaping India's Strategic Horizon.”
2. 2025-09-27 [Defense & Security] — India's 15-Year Defence Modernisation Plan
   The Ministry of Defence has outlined a 15-Year Defence Modernisation Plan for India (2025–2040), focusing on advanced technologies with acquisitions worth billions. The plan emphasizes AI, space-based warfare capabilities, unmanned systems, and direct energy weapons.
   More details

   UPSC Angle: India's 15-Year Defence Modernisation Plan focuses on advanced technologies.

   Key Facts:

   • Plan duration: 2025-2040
   • Focus: AI, space-based warfare, unmanned systems, direct energy weapons
   • Budget FY2025-26: ₹1.72 lakh crore for capital procurement
   • Indigenous production allocation: 75 percent of capital procurement
3. 2026-02-04 [Defense & Security] — Increased Capital Spending for Defence Sector in FY2026-27
   The government has announced a 15.2% hike in the total defence budget for FY2026-27, primarily to address tactical gaps exposed by the recent Operation Sindoor conflict, allocating ₹7.85 lakh crore to the Ministry of Defence, the highest among all ministries. Capital outlay for new acquisitions rose by nearly 22%, totaling ₹2.19 lakh crore, with 75% of the capital acquisition budget (₹1.39 lakh crore) reserved for domestic industry. Allocation for the Border Roads Organisation (BRO) increased to ₹7,394 crore for strategic tunnels and bridges.
   More details

   UPSC Angle: 15.2% hike in defence budget for FY27 to address tactical gaps.

   Key Facts:

   • Ministry of Defence total allocation: ₹7.85 lakh crore
   • Capital outlay increase: ~22%
   • Capital outlay total: ₹2.19 lakh crore
   • Domestic procurement target: 75% of capital acquisition budget
   • Domestic procurement amount: ₹1.39 lakh crore
   • BRO allocation: ₹7,394 crore
   • Total defence budget for FY2026-27: ₹7.85 lakh crore
   • Increase in capital outlay for new acquisitions: 22%
   • Capital outlay for FY2026-27: ₹2.19 lakh crore
   • Percentage of capital acquisition budget reserved for domestic industry: 75%
   • Amount reserved for domestic industry: ₹1.39 lakh crore
   • Allocation for Border Roads Organisation (BRO): ₹7,394 crore
   • Operation Sindoor conflict tactical gaps addressed
4. 2026-02-13 [Defense & Security] — Defence Acquisition Council Approves Proposals Worth ₹3.60 Lakh Crore
   The Defence Acquisition Council (DAC) has accorded Acceptance of Necessity (AoN) for capital acquisition proposals worth approximately ₹3.60 lakh crore. The DAC is the highest decision-making body of the Defence Ministry on procurement and is chaired by the Defence Minister. It was formed in 2001, post-Kargil War (1999), based on the Group of Minister's recommendations on 'Reforming the National Security System'.
   More details

   UPSC Angle: DAC approves acquisition proposals worth ₹3.60 lakh crore.

   Key Facts:

   • AoN proposals approved: ₹3.60 lakh crore
   • DAC formation: 2001, post-Kargil War (1999)
   • DAC Chairperson: Defence Minister
   • DAC is central to India's Defence Acquisition Procedure (DAP) 2020
5. 2026-02-13 [Defense & Security] — DEFSAT 2026: Defence-Space Forum for Industry Expansion
   DEFSAT-2026, the 4th edition of India's defence-space dialogue platform, is scheduled to take place between February 24 and 26 in New Delhi. India's defence budget is ₹7.85 lakh crore for FY 2026–27, marking a 15% increase and ₹2.19 lakh crore has been earmarked for capital outlay. Procurement from domestic defence industries has been prioritised with ₹1.39 lakh crore reserved for Indian suppliers.
   More details

   UPSC Angle: DEFSAT-2026: Defence-Space Forum for Industry Expansion.

   Key Facts:

   • DEFSAT-2026 to take place between February 24 and 26 in New Delhi
   • India's defence budget of Rs 7.85 lakh crore for FY 2026–27, a 15% increase
   • Rs 2.19 lakh crore earmarked for capital outlay
   • Rs 1.39 lakh crore reserved for procurement from domestic defence industries
   • DRDO allocation has also risen to Rs 29,100.25 crore
6. 2026-02-17 [Economy] — Private Sector's Rising Contribution to India's Defence Output
   Defence Minister Rajnath Singh stated that private sector companies now contribute nearly one-fourth of India's total defence production, marking a shift from the public sector-dominated military manufacturing model. The minister also mentioned reforms undertaken to augment the contribution of the private sector, such as corporatization of Ordnance Factories and liberalized investment schemes.
   More details

   UPSC Angle: Private sector contributes ~25% of India's defence production.

   Key Facts:

   • Private sector contributes nearly one-fourth of India's total defence production
   • Reforms include corporatisation of Ordnance Factories and liberalised investment schemes
7. 2026-02-22 [Defense & Security] — Record defense budget focuses on AI and self-reliance.
   India's FY27 defense budget has reached approximately $93.5 billion (₹7.85 lakh crore), a 15.2% increase, signaling a shift towards AI, autonomy, and self-reliance. Capital expenditure sees a 21.8% surge, totaling over $26.1 billion (₹2.19 lakh crore), with $9.8 billion specifically for AI and autonomous systems.
   More details

   UPSC Angle: India's FY27 defense budget focuses on AI and self-reliance.

   Key Facts:

   • FY27 defense budget: approximately $93.5 billion (₹7.85 lakh crore).
   • Capital expenditure increase: 21.8%.
   • Capital expenditure total: over $26.1 billion (₹2.19 lakh crore).
   • Allocation for AI and autonomous systems: approximately $9.8 billion (₹82,217 crore).
   • Pension allocation: approximately $20.4 billion (₹1.71 lakh crore), 21.84% of the budget.
   • Pay and allowances: $24.7 billion, 26.40% of the budget.