Development Vs Defence | India’s balancing act in a polarised world

The recent NATO Summit in The Hague witnessed the new dawn of realism, prominently led by United States President Donald Trump and followed silently by most European partners. With a commitment to ‘invest 5 per cent of GDP annually towards defence — and security-related spending by 2025’, it is clear that NATO is concerned about the US’ security and economic realism.

Yet Spain has taken a tough stance by announcing to spend only 2.1% of its GDP on military, followed closely by Belgium seeking ‘maximum flexibility’ in meeting NATO’s revised spending target. Experts point out how the 2025 NATO Declaration bluntly made no mention of ‘protection and preserving the rules-based international order as laid down by the UN Charter’ — a norm noticed in earlier declarations. Although security-related issues are embedded within the NATO discourse, diplomatic endeavours need to factor in aspects of inclusive growth, shared prosperity, and collective multilateral order — an element noticed in its previous iterations.

A look at global outlay on defence reflects a steady increase in spending capacities of the nations. For instance, in 2024, military spending globally rose by 9.4% in real terms, amounting to $2,718 billion. This also happens to mark the tenth consecutive year of an increased global defence budget. The US, China, and Russia top the list, with India in fourth position, as per the Stockholm International Peace Research Institute (SIPRI) Military Expenditure Database.

For India, its defence capabilities are gradually expanding by way of industrial reforms, modernising armed forces, and strengthening the native defence production to meet not only its domestic needs but also for bolstering exports. Spending almost 2.3% of its GDP on defence, India allocated about $75 billion in its Union Budget 2024-2025.

Rising geopolitical strife across the globe, including in its own backyard with terrorist strikes in Pahalgam in April, has perceptibly compelled New Delhi to focus its energies on enhancing self-reliance in military preparedness. Yet technological innovations, R&D development, and leveraging investment towards military infrastructure depend largely on a nation’s fiscal framework and its strategic priorities.

India’s cordial, yet careful, stance away from a NATO membership is rooted in its historical foreign policy of non-alignment and maintaining its strategic autonomy. Instead of depending on any military alliance to aid its external security, India chooses to safeguard its borders flexibly, depending on the fast-changing regional and global dynamics.

However, in the face of increased global defence spending, development is naturally experiencing a stress test at the international scale. Talks of climate adaptation, building health resilience, energy transition and ensuring holistic sustainable development are gradually coming under intense strain. As such, Agenda 2030 appears to be in a jeopardy.

Geopolitical tensions have visibly created ruptures in the global security architecture resulting in a fractured community. Real needs of the vulnerable, such as access to clean energy, nutritious food, and good health is a pivotal target for a majority of the low-income and least-developed countries. But at the same time, securing one’s territorial integrity, sovereignty, and maintaining strategic autonomy is heavily reliant on cutting-edge military equipment and defence mechanisms.

With multilateral forums like the G20 and BRICS pushing forward the socio-economic development agenda of the Global South and attempting to establish a counterforce to the existing Western institutions, ensuring smooth international order is a persistent challenge. In this sense, threats by Trump to impose extra tariffs on the BRICS countries yet again underscore the economic realism aimed at capturing the currency market in global supply chains.

Led by both NATO and non-NATO countries alike, global spending trends on defence possibly enforce the reprioritisation of security over development. Yet it’s a catch-22 situation. As one of the prominent partners and fastest-growing economies in the world, the big question remains — is India ready to deal with the economic trade-offs associated with welfare and larger developmental targets and defence spending?

Swati Prabhu is Associate Fellow at the Observer Research Foundation.