The P5 lead the race

Leading the pack, US President Donald Trump in April unveiled a $1.5 trillion defence spending request for financial year (FY) 2027, beginning October 1,2026. If approved in full, it would represent a 42 per cent increase over current funding levels, making it the largest defence budget in US history. France and the UK are close behind. In July, France’s parliament cleared an updated “military programming law” adding €36 billion ($42.04 billion) in spending by 2030, taking the 2024-30 total to €436 billion ($509.12 billion) and lifting defence spending to about 2.5 per cent of GDP, from 2.0 per cent in 2025. The UK is moving at a similar pace: in June, then Prime Minister Keir Starmer unveiled a Defence Investment Plan committing almost £298 billion ($406 billion) over four years — a £15 billion increase on earlier projections — taking spending from 2.4 per cent of GDP in 2025 to 2.7 per cent by 2029. A comparable multi-year spending commitment is not readily available for China, but the country is continuing on its path of military modernisation. China’s 15th Five-Year Plan (FYP), which runs through 2026-30, was adopted in March and intends to accelerate its military-modernisation goals, prioritising the People’s Liberation Army’s transition towards “intelligentised”warfare.

These plans might look like a reaction to the intensifying conflicts of the past few years, with Russia’s 2022 invasion of Ukraine often cited as the trigger for Europe’s rearmament. But data from the Stockholm International Peace Research Institute (Sipri) suggests otherwise: comparing 2007–2016 with 2016–2025 reveals a shift that predates the war by over half a decade. The US and UK cut spending by 4.8 per cent and 12 per cent, respectively, in the first period, then reversed course, rising 11 per cent and 32 per cent in the second. Germany went from a 6.8 per cent rise to 118 per cent; France from 2.8 per cent to 21 per cent.

India saw its rate of growth slow, from 54 per cent in the 2007-16 period to 39 per cent in 2016-25. However, its 2026-27 (FY27) budgetary allocation for defence, at ₹7.85 trillion ($82.03 billion), reversed the recent decline in military spending as a share of GDP, taking it to just under 2 per cent from 1.91 per cent a year earlier.

Major General Ashok Kumar (retired), director general of the Centre for Joint Warfare Studies, said recent conflicts — from the 2020 Nagorno-Karabakh war through Ukraine and West Asia — have reshaped how “military powers perceive state-on-state conflict”. Swarm drones and loitering munitions, first proven in Ukraine and used more widely across West Asia by 2025, have shown they will be critical to future conflicts. “Until now, the dominant approach was to pursue systems that were sophisticated, expensive and highly precise. The need for precision remains, but a dynamic combat mass has become non-negotiable,” Kumar said.

“The drones employed in 2022 and 2023 are already obsolete. As a consequence, long development cycles are no longer fit for purpose,” said Bodhisattwa Sanghapriya, founder and chief executive officer of IG Defence, a Noida-headquartered manufacturer of drones and loitering munitions whose systems were used during Operation Sindoor in May 2025. Sanghapriya said domestic industry was responding to the demands of modern warfare, as well as to growing orders from the armed forces. “Before Operation Sindoor, perhaps 100 first-person-view kamikaze drones were being procured annually. Contrast that with the 5,000 ordered from us in the financial year 2025-26 (FY26) alone, all of which were successfully delivered. Notably, larger repeat orders are already in the pipeline.”

“The hardware will always be there, but without the artificial intelligence layer it becomes just another tank,” Sanghapriya stressed. 

The focus on autonomous systems, and the need to develop affordable counters to them, is also evident in the US budget request and the UK’s investment plans. The US Department of Defense said in a release: “Delivering over a $74 billion investment, President Trump’s request triples how much we will spend on drone and counter-drone technologies from FY26. This marks the largest investment ever in this sector.” In the UK, it was reported in June that the country was increasing planned spending on military drones from £4 billion ($5.46 billion) to £5 billion ($6.82 billion) over the next four years. This, however, does not mean that traditional platforms and weapons will cease to be procured or developed into increasingly advanced, next-generation variants.

“Access to autonomous systems and long-range projectiles has been democratised. Just look at how the Houthis have used them to threaten shipping. Kinetic, non-contact warfare — conflict conducted through stand-off strikes without significant close-quarters troop engagement — has also emerged as a preferred mode of combat, as witnessed during Operation Sindoor. However, while new-age systems have emerged as potent tools, it would be incorrect to assume that traditional platforms will lose their relevance entirely. They will instead increasingly share the battlespace, complementing modern systems,” said Kumar.

This is also reflected in a number of programmes now under way, including crewed sixth-generation combat-aircraft projects in the US, China and Europe. China’s apparent testing of prototype aircraft believed to be developmental models has, in particular, drawn close attention in the West.

The continuing importance of traditional platforms is evident from India’s ambitious defence-technology development programmes: India is developing an advanced medium combat aircraft, a crewed stealth fighter at ₹15,000 crore ($1.57 billion), and its engine at ₹50,000 crore ($5.22 billion).

Procurement priorities point to a similar dynamic as India is acquiring 114 French-made Rafale jets at an estimated ₹2.70 trillion ($28.2 billion based on exchange rates at the time of writing).

Naval ship and submarine building is also keeping pace: the US Navy is seeking $305.7 billion to procure 75 ships by FY31, while China — whose shipbuilding budget isn’t easily available— is reportedly building its first nuclear-powered aircraft carrier.

There are also indications that some of the funds being earmarked for military spending are flowing into the expansion and modernisation of nuclear arsenals. Sipri’s annual assessment of the state of armaments, disarmament and international security, published in June, found that the nine nuclear-armed states — the US, Russia, the UK, France, China, India, Pakistan, North Korea and Israel — continued programmes to modernise and enhance their nuclear arsenals in 2025. Most of them, the report noted, had also “deployed new nuclear-armed or nuclear-capable weapon systems” during the year.

“Every conflict offers lessons about what works and what has become obsolete. The pace at which capabilities become obsolete is itself accelerating. As conflicts multiply and intensify around the world, military planners will have an ever-growing body of experience to draw on. How those lessons translate into the composition of national inventories remains to be seen,” Kumar said. What is already becoming clear, however, is that military arsenals around the world are entering a period of notable expansion.