As China's defence outlay soars by 7.2%, here is what India, US spend
China has announced a 7.2 per cent increase in its annual defence budget, raising it to over USD 245 billion. The announcement, made on Wednesday, is part of ongoing efforts to expand and modernise the country’s military capabilities across the entire spectrum of conflict and growing global power projection, particularly in the Indo-Pacific region.
The news of an enhanced defence budget comes in the wake of an economic stand-off between China and the United States over tariffs on goods imported and exported to each other. As US President Donald Trump increased levies on Chinese goods being brought into the US, China has hardened its stand and responded in kind.
“If war is what the US wants, be it a tariff war, a trade war or any other type of war, we are ready to fight till the end,” the Chinese Embassy in the US tweeted on Wednesday in response to Trump’s moves.
“Intimidation does not scare us. Bullying does not work on us. Pressuring, coercion or threats are not the right way of dealing with China. Anyone using maximum pressure on China is picking the wrong guy and miscalculating,” China’s ministry of foreign affairs said while blaming the US for launching a trade war.
According to the 2025 assessment by International Institute for Strategic Studies (IISS) in London, China maintains the largest armed forces in the world with an estimated 20.35 lakh active military personnel, followed by India with 14.76 lakh and the US with 13.15 lakh personnel. These figures do not include military reserves of the paramilitary forces.
When it comes to military spending, the US tops the charts. According to 2025 estimates, the US defence outlay amounts to USD 968 billion, followed by China.
While the official Chinese figure is just about a fourth of what its major professed adversary is spending, it is widely believed that China’s actual defence expenditure could be up to 50 per cent higher because many defence related allocations are made under heads meant for different ministries and departments.
At No.3 is Russia, embattled with Ukraine, with a defence budget of USD 146 billion, followed by Germany with USD 86 billion and the United Kingdom with USD 81 billion. Sixth on IISS’ list for 2025 is India with USD 74 billion, which is about a third of China’s official outlay.
The Russia–Ukraine war also saw an increase in defence spending by some European countries as they not only provided military aid to Ukraine, but also scrambled to build up their own capabilities fearing a threat from Russia. The end of the Cold War had led to reduction in force levels and inventories in Europe.
Reports say that European defence spending growth surged to 11.7 per cent in real terms in 2024 and the overall expenditure in Europe was over 50 per cent higher when compared to 2014. Before the conflict, European countries spent less than India.
With Trump now rooting to withdraw from the North Atlantic Treaty Organisation (NATO), the post-World War Two western military alliance against the erstwhile Soviet Union, and asking NATO's partners to bear their own security burden, European defence spending could see a further increase.
On March 4, the European Union had unveiled a USD 843 billion plan to rearm Europe over the next few years.
The Rs 6.81 lakh crore allocation for the Ministry of Defence in the Union Budget for the 2025-26 fiscal presented in Parliament on February 1 reflected a six per cent hike over the previous year in absolute terms, which in real terms would be lower after taking inflation into account.
Military analysts have often called for increasing capital outlays for the defence sector to overcome several operational shortcomings, fill in growing voids in force levels and give an impetus to indigenous research and development. A huge chunk of the defence budget goes towards salaries and pensions.
Israel and Ukraine, both embroiled in conflict, have defence budgets of USD 33.7 billion and USD 28.4 billion, respectively, falling amongst the top 14 defence spenders in the world.
Israel has been battling non-state operators like the Hamas and Hezbollah, while Ukraine is locked in a war with Russia since 2022. With Trump assuming the office of the President of the United States, there are ongoing attempts to end both these conflicts.
A report by the Stockholm International Peace Research Institute (SIPRI) revealed that in 2023, Ukraine spent a whopping 37 per cent of its GDP on defence, the highest in the world, where as Russia spent 5.9 per cent.
Amongst other top spenders, defence outlays accounted for 3.4 per cent of the GDP in the US, 1.7 per cent in China, 2.4 per cent for India and 2.3 per cent in the United Kingdom for that year.
Notably, India’s immediate neighbour and arch rival Pakistan, which has waged four wars and sponsored insurgencies and terrorism in India resulting in thousands of deaths and heavy expenditure on security, does not figure in IISS’s list of top 30 military spenders.
Its close ties with China and its plans for the procurement as well as involvement in developing new military platforms in collaboration with China and Turkey are well known.
The London think-tank’s data also shows that global defence spending reached USD 2.46 trillion in 2024, up from USD 2.24 trillion in 2023. Real-terms growth rose to 7.4 per cent in 2024 compared to 6.5 per cent in 2023 and 3.5 per cent in 2022.
Further, all regions, except Sub-Saharan Africa, grew in real terms in 2024. As a proportion of GDP, global spending increased from an average of 1.59 per cent in 2022 to 1.80 per cent in 2023 and 1.94 per cent in 2024.
There are a few countries like Costa Rica, Iceland, Vanuatu and The Vatican, who have no active-duty military forces but, given their geographical location, circumstances and geopolitical situation, rely only on paramilitary or police forces to meet their security requirements.
A number of countries have active-duty military ranging from a few hundred to a few thousand personnel or without platforms such as combat aircraft or warships, requiring only a minimal expenditure.
