NEW DELHI: India on Saturday proposed defence spending of 6.81 trillion rupees ($78.70 billion) for the 2025-26 fiscal year, up 9.5% from the previous year’s initial estimates, with most eaten up by wages and pensions rather than acquiring new weapons.

The 4.7 trillion rupees the budget allocated for manpower costs dwarfed its proposed capital outlay of 1.80 trillion rupees, focused on modernisation and defence procurement.

The capital outlay figure was 4.6% more than the previous year, but analysts said it needed to be higher still to meet India’s efforts to modernise its military to counter rival China.

Main allocations in terms of outlay were 486 billion rupees for aircraft and aero engines, and 243.9 billion rupees for the naval fleet – two key areas where India is seeking to enhance its capabilities.

“This has been a concern for a long time, that pensions (and) salaries put together… consume the major chunk of the defence budget, which continues to be the case,” Amit Cowshish, former financial adviser for acquisitions at the Defence Ministry, said.

Even with higher spending, the slow speed at which defence deals can be procured is hampering efforts to build up India’s military, analysts said.