Event Report
Varisha Sharma
On 5th February 2026 at 3:00 PM IST, the Centre for International Relations and Strategic Studies of the Impact and Policy Research Institute, IMPRI, organised an online panel discussion titled “Defence, Foreign Policy and Union Budget 2026–27”as part of its 7th Annual Series of Thematic Deliberations and Analysis of the Union Budget 2026–27.
The session brought together professors and scholars who are International Relations experts as well as defense personnel with field experience. The session opened with the welcome remarks delivered by Paridhi Jain, Research Intern at IMPRI, following which she welcomed the Chair and Moderator of the session, Dr. Simi Mehta, CEO and Editorial Director at IMPRI, who was also the convenor of the session alongside Dr. Arjun Kumar, Director, IMPRI. The distinguished panel of speakers included:
- Major General Dr. P.K. Chakravarti VSM (Retd), Strategic Thinker on Security Issues, Visiting Senior Fellow, IMPRI
- Prof. Sanjukta Bhattacharya, Retired Professor, International Relations, Jadavpur University, Kolkata, Visiting Professor, IMPRI
- Prof. Prabir De, Professor at Research and Information Systems for Developing Countries (RIS), New Delhi
- Prof. Swaran Singh, Professor and Chairperson, Centre for International Politics, Organisation and Disarmament, Jawaharlal Nehru University, New Delhi
- Prof. Annpurna Nautiyal, Former Vice-Chancellor, Hemwati Nandan Bahuguna Garhwal University, Uttarakhand
Following the introduction of all the panelists, a short presentation was presented highlighting the impact of the budget for the financial year 2026-27 on two sectors: Defense and Foreign Affairs.
The Ministry of Defense has been allocated Rs 7.85 lakh crore, which is the highest amount allocated to defense and a 15.19% increase from FY 2025-26. There is an increase in the capital expenditure and allocations to the Border Road Organisation as well as allocation of Rs. 975 crore for optical fibre cable-based network for defense services. This alongside the focus on indigenous defense manufacturing and increased funding to DRDO to ensure more research in the defense sector clearly highlights the importance given to the defense sector as well as the development of newer and more advanced technologies for strategic and security purposes.
There has been a 12% increase in the budget allocated to the Ministry of External Affairs with most of the allocations directed towards development of grassroots partnerships, Vaccine Maitri 2.0, neighbourhood aid and economic diplomacy expansion. There has been an increase in the grant-in-aid in keeping with India’s “Neighbourhood First” Policy under which Bhutan was allocated Rs. 2888 crore of grant-in-aid to facilitate more hydropower projects. It was also noted that there has been no new funding for Indo-Pacific or QUAD military cooperation, a reduction in the foreign aid allocated to Bangladesh and zero allocations for Chabahar Port possibly due to U.S. sanctions.
Budget as a Strategic Economic Document:
Dr. Simi Mehta, Chair for the discussion, while introducing the topic and the panelists, highlighted how Budget 2026-27 is not just an economic document but a strategic document as well, considering the contemporary conflicts in Europe and West Asia and the perception of India as a regional power in the Indo-Pacific. The current budget thus positions India as a credible economic partner and security provider and a rule-shaper of the global order.
Dr. Mehta then invited Prof. Prabir De to deliver his opening remarks on his perspective on the budget aligning with the strategic priorities of India who began by explaining the trajectory of the budget in the past few years and how it is linked to the vision of Viksit Bharat by 2047. While the IMF has projected the growth of the Indian economy by 2030, Prof. De also expressed concerns over the current fragmented economic landscape due to inflation, stalled reforms, persistent wars and supply chain disruptions. Nevertheless, he viewed the current budget as extremely people-friendly with the income tax slabs remaining the same.
He also remarked how the budget represents a dedication to the multiple driving pillars of the economy, such as agriculture, infrastructure, connectivity, manufacturing and the service sector. It also represents India’s push for modernisation and relevance with a focus on AI, semiconductors and rare earth minerals. Sir then examined the various challenges that still exist, including the unstable geopolitical landscape and global uncertainties, energy security and a divided climate agenda.
While examining India’s MEA budgetary allocations, Sir highlighted how in recent years the workload of MEA has increased, but the financial support has declined. India is continuing its “Neighbourhood First Policy” and has also doubled its budgetary allocations for the Latin American countries which highlights India’s changing priorities in the contemporary world order.
Sir concluded his opening speech by highlighting how India is now focusing on clean energy transition and ease of access to Customs Services with the proposed Customs Integrated Services that are planned to be rolled out in 2 years, with the aim of making the customs process easier, accessible and smoother. India is also planning on laying 7 high-speed railroads that showcase India’s drive towards development.
Foreign Policy, MEA and Skill Development:
The second speaker for the session was Prof. Swaran Singh, who appreciated that the budget indicates future readiness through initiatives focusing on technological autonomy and indigenisation but also criticised that despite India’s desire to become a global player, the budget allocated to the Ministry of External Affairs(MEA) has always been very low. There has been no significant increase in the number of personnel employed in the MEA despite India being extremely proactive in setting up new embassies. Instead, most of the budgetary allocation of MEA has been directed towards grant-in-aid and the setting up of new consulates.
Prof. Singh also highlighted that while increased allocation to defense and the Ministry of Home Affairs is necessary, at the same time, the centre must now pay attention to skill development and allocate a significant amount to the Ministry of Education, as it is only via education that India can create talent ready for global competition. Sir concluded his opening remarks by emphasizing that while increased allocations to ensure security are crucial at the same time, similar increased allocations must be made to the Ministry of External Affairs to increase India’s soft power and to the Ministry of Education to at least meet the proposed proposal of experts of allocating 6% of GDP to education.
The importance of higher education in developing strategic capabilities, particularly for the industry of tourism and archaeology which is a major industry in India, was further discussed by Prof. Annpurna Nautiyal, who emphasised leveraging soft power harnessed via education and gaining an edge over neighbouring competitors like China, especially in Buddhism. Giving an educator’s perspective, Ma’am highlighted how the setting up of targeted education hubs for guides and archaeologists was extremely necessary. She has a positive perspective on the budget remarking how this budget was a step towards Atmanirbharta- making India more self-reliant.
Defense and Budget:
A major topic of the session- defense was expanded in detail by Major General Dr. P.K. Chakravarty, who given his illustrious background in defense, was able to give an insider perspective. He highlighted that despite an increase in the allocation to defense, India’s defense spending is still very low compared to that of major powers like the U.S or China. He expressed hope that the capital budget would be enough to improve and sustain capabilities like those of intelligence, surveillance and reconnaissance which are integral to defense.
He explained how the defense strategy of India has now changed to a Dynamic Response Strategy as visible in Operation Sindoor and Operation Sindoor 2.0. Major General Dr. P.K. Chakravarty also stressed the need to develop newer technologies and satellites meant specifically for defense, as well as more collaborations with IITs and other higher educational institutions to develop these technologies. Sir also emphasised that this is the age of non-contact warfare and so India needs to improve its capabilities in technologies like counterdrones.
While Sir appreciated indigenization, he stated that in reality, there is some part of the technology that must always be exported since there are very few in the world that produce engines. This is limited to the U.S, a few European countries and now China. Sir highlighted how this is due to large scale production of engines being unsustainable for private interests in India as well as India’s economic growth in the longer run.
Foreign Policy and Threat Perception in Changing Times
Dr. Simi Mehta asked the final speaker for the panel, Prof. Sanjukta Bhattacharya, a very pertinent question on how Indian Foreign Policy is perceiving new threats and changing accordingly to the ever-dynamic global order. Prof. Bhattacharya began her address by giving a summary of all the allocations given to defense and foreign affairs and in her analysis, she highlighted how defense is heavily linked to our foreign policy, economy and development of human capital. Ma’am appreciated the budget for recognising the contemporary challenges that exist both on land and maritime routes.
She explained how the current budget has also taken into account the new contours of power and warfare, be it in the sphere of cyber technologies or space. While discussing the shortcomings, she examined how India still follows a platform-centric system but in order to develop further, India must adopt policies similar to those of the United States, which are architecture-centric.
Detailed Discussion on the Themes of Defense and Foreign Affairs
In the second and final round of discussions, Dr. Simi Mehta thanked all the panelists for their opening remarks and asked them all a question individually, drawing on their speeches from the first round.
She first asked Prof. Prabir De to analyse the budget from a macroeconomic perspective and whether increased defense spending enhances India’s global credibility and position as a security provider or does it have any fiscal risks. Prof. De answered by discussing how the Union Budget 2026-27 must be understood in the contemporary context- one that is witness to a fragmented and unstable world order.
Keeping this in mind, India’s increased allotment in both the spheres- defense and foreign affairs- but especially defense, makes rational sense. The economic impact of this, however, might be felt by the general population. While the economic policies are such that the government cannot levy more indirect taxes, perhaps the near future might witness more direct taxes being imposed on the people.
Dr. Simi Mehta then asked Prof. Swaran Singh about his perspective on the Union Budget 2026-27 and its alignment with the foreign policy of India in the context of India’s dominant position in the Indo-Pacific and its neighbourhood. Prof. Swaran Singh reiterated the fact that the budget allocated to defense has increased, which indicates one thing clearly: national security is of paramount importance.
However, since the government has a limited number of funds, if spending is increasing in one sector, other sectors would be compromised. Thus, it is essential to ensure that all sectors move together and the budget is more holistic in its allocation to various sectors. Just like defense, the MEA as well as the Ministry of Education, must get a significant allocation.
Dr. Annpurna Nautiyal, in her closing remarks was asked to examine the issues and gaps that remain unaddressed in the budget. Ma’am, as stated in her opening remarks reiterated that skill development and empowerment of the population is the need of the hour. The human resources and potential that India possesses need to be harnessed and trained properly and for this, education is of utmost importance. Dr. Nautiyal further commented that the Startup culture needs to be supported and the youth needs to come forward and stimulate innovation and newer technologies if India wishes to be at par with China or the Western powers.
Given his expertise and experience in the field, Dr. Simi Mehta asked Major General Dr. P.K. Chakravarty whether the increased budgetary allocations are sufficient to improve the capabilities of the Ministry of Defense. Major General Chakravarty appreciated the increase in allocations but at the same time commented on how institutional and infrastructural changes are required and speed and efficiency from the bureaucracy is a must to actualise the allocations into real-time on-ground changes.
The institutional process needs to become more streamlined so that approvals and signatures don’t risk the security of the nation. Further sir concluded by agreeing with the other experts on how skill development is the need of the hour for India to advance rapidly in this rapidly changing world order.
Prof. Samjukta Bhattacharya delivered the concluding note by giving a gist of the budget and all that was discussed and how the current budget is also focused on shaping India’s soft power and diplomatic leverage in the neighbourhood. Ma’am talked about Joseph Nye’s concept of soft power and how today the concept has evolved and the world has moved from soft power to smart power. While the increase in the number of embassies and consulates abroad is a good first step, at the same time, it isn’t enough and more needs to be done.
In the “Neighbourhood First” Policy of the Indian government, the concept of interconnectedness is of utmost importance and must be implemented properly. This becomes even more crucial as in recent years there has been a rise of anti-India sentiment, particularly in the Maldives and currently due to the internal disturbances in Bangladesh and from time to time in Nepal as well. Prof. Bhattacharya heavily emphasised how, instead of strategic autonomy, the contemporary era is of stark realism.
India’s grant-in-aid allocations for this year have taken into account all these sentiments and are representative of realism in the Indian Foreign Policy. Bhutan has been allocated the highest grant-in-aid in order to ensure collaborations for building dams and tapping into the hydroelectric power and other natural resources of Bhutan. Chahabar port has not been granted any allocation which represents caution and strategic restraint exercised in the Indian Foreign Policy in keeping with the threat of the U.S. sanctions. Thus, India’s grant-in-aid policy is not just a reflection of India’s goodwill but is a statement of India’s economic and strategic interests.
Conclusion:
Dr. Simi Mehta thanked Prof. Bhattacharya for her profound reflections which brought together all the different perspectives and gave a comprehensive analysis of the budget. Dr. Mehta then closed the session with her final remarks on how the Union Budget 2026-27, particularly in the field of defense and foreign policy, aligns military and economic interests with diplomacy and knowledge.
Now the real test is that of the Indian government and how successful it is in implementing the changes and proposals to fulfil its objectives underscored in the budget. Following this, Paridhi Jain, Research Intern at IMPRI, delivered the vote of thanks wherein she thanked the Chair, Convenor and Moderator for the session, Dr. Simi Mehta and all the panelists: Prof. Parbir De, Prof. Swaran Singh, Prof. Annpurna Nautiyal, Major General Dr. P.K. Charkravarty and Prof. Sanjukta Bhattacharya for their valuable time and expertise and after this the session ended.
Acknowledgment: Written by Varisha Sharma, research intern at IMPRI
