Rs 2.38 Lakh Crore in Defence Deals: What India Actually Bought and Why It Matters
TL;DR: India's Defence Acquisition Council just cleared Rs 2.38 lakh crore in military procurement, from S-400 missiles to indigenous artillery systems. It's the single largest batch of approvals in years, and it pushes FY26 total defence clearances to Rs 6.73 lakh crore across 55 proposals. Here's what's in the shopping cart, what it signals about India's strategic posture, and what the numbers don't tell you.
The Headline Number
On March 27, 2026, Defence Minister Rajnath Singh chaired a Defence Acquisition Council (DAC) meeting that greenlit military hardware worth Rs 2.38 lakh crore (roughly $25 billion). That's not the annual defence budget. It's a single day's worth of procurement approvals.
To put that in perspective: India's entire defence budget for FY 2026-27 stands at Rs 7.85 lakh crore, a 15.2% jump over last year. This one DAC session approved purchases worth about 30% of that annual budget.
But approval isn't spending. These are Acceptance of Necessity (AoN) clearances, essentially the government saying "yes, we want this." Actual procurement, negotiations, contracts, and payments will stretch across years. Still, the scale is hard to ignore.
What's in the Shopping Cart
The approvals span all three services plus the Coast Guard. Here's the breakdown:
Indian Army: - Dhanush Gun System for long-range artillery strikes. This is India's indigenous upgrade of the Bofors design, a gun with a complicated political history that now carries a "Made in India" tag. - Armour-piercing tank ammunition, new variants to keep India's tank fleet relevant. - Air Defence Tracked Systems for real-time aerial surveillance. - High-capacity radio relays for secure battlefield communications. - Runway Independent Aerial Surveillance Systems, essentially eyes in the sky for terrain where you can't build airstrips.
Indian Air Force: - S-400 long-range surface-to-air missile systems. This is the big one. The original $5.43 billion deal with Russia is nearing completion in 2026, and India is now looking at expanding the fleet. - Medium transport aircraft to replace the aging AN-32 and IL-76 fleets. These Soviet-era workhorses have been flying since the 1980s. - Remotely Piloted Strike Aircraft. India's push into armed drones, not just for reconnaissance but for offensive operations. - Su-30 engine overhaul program to extend the life of India's frontline fighter fleet.
Coast Guard: - Heavy-duty Air Cushion Vehicles (hovercraft) for high-speed coastal patrolling and search-and-rescue operations.
The Post-Sindoor Context
You can't read these approvals without understanding what happened in May 2025. Operation Sindoor, India's retaliatory air strikes on Pakistani targets after the Pahalgam terrorist attack that killed 26 civilians, fundamentally shifted the government's approach to military modernisation.
The 15% jump in the FY 2026-27 defence budget wasn't coincidental. According to Ministry of Defence officials, the spending increase reflects a "new focus on military modernisation triggered by Operation Sindoor." The operation exposed gaps. Aging transport aircraft, limited drone strike capability, and the need for better air defence coverage all became urgent rather than theoretical.
So when the DAC approves remotely piloted strike aircraft and medium transport planes in the same session, it's not just a wish list. It's a direct response to operational lessons learned.
The Make in India Question
The government has been pushing Aatmanirbhar Bharat (self-reliance) in defence for years. The FY 2026-27 budget earmarks Rs 1.39 lakh crore specifically for procurement from domestic defence industries.
But the reality is more nuanced. The Dhanush artillery system is genuinely indigenous, developed by the Ordnance Factory Board from the original Bofors design. The remotely piloted strike aircraft likely involve significant domestic production. These are real "Make in India" success stories.
The S-400, however, is Russian. The medium transport aircraft will probably be a foreign platform manufactured or assembled in India. And "engine overhaul" for the Su-30 means working with Russian systems.
The truth is somewhere between the government's "75% indigenous" talking point and the opposition's "we're still import-dependent" critique. India's defence manufacturing ecosystem has grown substantially. It just hasn't grown enough to build everything it needs, especially in high-end air defence and aerospace.
The budget itself acknowledges this tension. Basic customs duty exemptions on raw materials and components imported by MoD public sector units for aircraft manufacture were included in Budget 2026-27, a tacit admission that domestic production still needs imported inputs.
What the Numbers Actually Look Like
| Metric | Figure |
|---|---|
| Single DAC session approvals | Rs 2.38 lakh crore |
| Total FY26 DAC approvals (55 proposals) | Rs 6.73 lakh crore |
| FY 2026-27 total defence budget | Rs 7.85 lakh crore |
| Capital outlay (modernisation) | Rs 2.19 lakh crore |
| Domestic procurement earmark | Rs 1.39 lakh crore |
| Defence as % of GDP | ~2% |
| Year-on-year budget increase | 15.2% |
| Capital expenditure growth | ~22% |
That 22% jump in capital expenditure is the most telling number. Revenue expenditure (salaries, maintenance, pensions) still dominates the defence budget at around 63%. But the capital allocation, which goes toward actual new equipment, saw its biggest proportional increase in years.
The CAATSA Shadow
There's a geopolitical elephant in the room. India's S-400 purchase from Russia triggered concerns about CAATSA sanctions (Countering America's Adversaries Through Sanctions Act). The US ultimately provided India a legislative waiver, but the fact that Congress had to pass a specific exemption shows how complicated India's defence procurement map is.
India buys Russian missiles, French fighter jets (Rafale), Israeli drones, American transport aircraft, and indigenous artillery. It's a multi-alignment strategy that mirrors India's broader foreign policy. But it also means every major defence deal comes with a geopolitical calculation that has nothing to do with military capability.
The DAC approval for additional S-400 units signals India isn't backing away from Russian systems despite Western pressure. Whether that's strategic wisdom or inertia is a debate the headlines rarely get into.
Security Need vs Political Signalling
Here's where things get interesting. Rs 6.73 lakh crore in annual DAC approvals is unprecedented. But how much of this is genuine operational urgency, and how much is political optics?
The honest answer: both.
Post-Pahalgam, post-Sindoor, the government has both the strategic justification and the political incentive to demonstrate military strength. Opposition parties that question defence spending risk being branded anti-national. Media outlets that celebrate every procurement as "India's military might grows" aren't doing much analysis either.
What rarely gets discussed:
- Approval-to-delivery gaps. India's history with defence procurement is littered with projects that took decades from approval to induction. The Comptroller and Auditor General has repeatedly flagged cost overruns and delays.
- Revenue vs capital squeeze. Pensions and salaries eat up 63% of the defence budget. Every new system adds maintenance costs that compound over time.
- The standing committee's concerns. Parliamentary defence committees have pushed for a non-lapsable capital fund to ensure modernisation money doesn't get surrendered at year-end. This still hasn't happened.
The Balanced Take
India faces genuine security threats. Two nuclear-armed neighbours, ongoing border disputes, maritime security challenges in the Indian Ocean, and an evolving terrorism landscape all demand serious military capability.
The Rs 2.38 lakh crore approval addresses real gaps. Aging aircraft need replacing. Air defence needs strengthening. Indigenous artillery development deserves investment. Drone capability is a 21st-century necessity.
But procurement approvals are not the same as military readiness. The gap between announcing a Rs 6.73 lakh crore shopping list and actually putting that equipment in soldiers' hands is where India's defence story gets complicated, and where media coverage gets thin.
The headline writes itself: "India approves massive defence deals." The harder story is tracking what happens next.
Sources
- PIB: Defence in Union Budget 2026-27
- Odisha Bytes: Govt Approves Defence Proposals Worth Rs 2.38 Trillion
- Free Press Journal: Rs 2.38 Lakh Cr Defence Deals Cleared
- News Arena India: Centre Clears Mega Defence Plans
- The Diplomat: India's Defense Budget Jumps 15 Percent
- PwC India: Union Budget 2026-27 Defence Analysis
- PRS India: Demand for Grants 2026-27 Defence
- Army Recognition: India Seeks Additional S-400 Systems
- Tribune India: Russia to Complete S-400 Delivery in 2026
- IAS Score: US CAATSA Sanctions Waiver for India
