The ongoing Russia–Ukraine war, tensions between the US and Venezuela, and US President Donald Trump’s aggressive stance on Greenland and Iran have heightened geopolitical risks.

As geopolitical conflicts intensify, several countries are increasing their defence budgets. Trump has proposed to raise the military budget to $1.5 trillion in 2027 — a 50% increase from the earlier projection.

The evolving geopolitical scenarios have fuelled speculation that the Indian government, too, may step up defence spending in the Union Budget 2026.

Rising global conflicts

US action on Venezuela surprised the world. The US military attacked Venezuela and captured its President, Nicolas Maduro, and his wife, Cilia Flores. This raised apprehensions that China might use the chaotic situation to make Taiwan move.

Geopolitics is complex, and speculation around future developments can be diverse and fluid. Experts believe China’s approach towards Taiwan will likely depend on the regional military balance as well as domestic political considerations.

“China does not view Taiwan through the prism of U.S. behaviour in Latin America. Taiwan is a core sovereignty issue for Beijing, and Chinese decision-making is driven primarily by the regional military balance, the credibility of U.S. alliances, and domestic political considerations,” said Manoranjan Sharma, Chief Economist at Infomerics Ratings.

Sharma believes aggressive U.S. action against Venezuela may reinforce deterrence by signalling Washington’s willingness to act decisively when it defines its interests as vital.

However, he added that “China is far more influenced by U.S. military posture in the Indo-Pacific, trilateral coordination among the U.S., Japan, and the Philippines, and Taiwan’s own defence preparedness than by events elsewhere.”

“In the context of Arunachal Pradesh is long-standing. Beijing calibrates pressure on India based on India–U.S. strategic proximity, India’s military preparedness along the Line of Actual Control (LAC), and internal stability in Tibet. These actions are calculated and strategic, not reactive in a linear or symbolic sense,” said Sharma.

Will India increase its defence budget?

Many experts believe Indian will increase its budget outlay on the defence sector not only due to heightened geopolitical risks and China’s rapid military expansion, but also because of its increased push for self-reliance in defence manufacturing.

“Higher allocation for defence in the 2026 Budget is certain,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.

Last year, the Indian government set aside over ₹6.8 lakh crore for the defence sector for FY2025-26, including ₹1.8 lakh crore for the modernisation of the military. This year, experts expect a significant rise.

Sharma underscored that India has already been increasing its defence spending in response to growing global instability.

These decisions are guided by a clear five-point framework:

(i) China as the primary long-term strategic challenge.

(ii) A two-front contingency involving China and Pakistan.

(iii) Indigenisation under “Make in India” and “Atmanirbhar Bharat”.

(iv) Naval expansion across the Indian Ocean.

(v) A shift toward technology-driven warfare, including drones, cyber, and space.

Sharma said India has steadily raised defence outlays, prioritising capital expenditure over personnel costs and investing heavily in missiles, air defence, and surveillance capabilities.

“Rather than sudden spending spikes, the trajectory points toward sustained increases, improved efficiency, and greater reliance on private-sector participation and joint production, said Sharma.

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