Taiwan Seeks Record Defense Budget With Drones and Missiles in Focus

Taiwan has proposed an 18 percent increase in defense spending for 2027, pushing its military budget above $34.5bn for the first time as Taipei directs more money toward drones, missiles and other asymmetric capabilities.

The plan would take defense expenditure above NT$1.1tn and more than 3 percent of gross domestic product, marking a further expansion of President Lai Ching-te’s military modernization program.

Lai said ahead of the budget announcement that the increase would demonstrate “Taiwan’s determination to strengthen its self-defense”.

“Investing in defense is investing in peace,” he said.

Drone and Missile Spending Rises

The government is seeking a particularly sharp increase in funding for asymmetric combat capabilities, including drones. Spending in that category is set to rise 91 percent to NT$144.5bn.

Hsieh Chi-hsien, head of the defense ministry’s comptroller bureau, said the plans also included supplementary funding for drones and missiles that had previously failed to secure parliamentary approval.

Taipei has sought to expand its domestic drone industry while pursuing other military modernization projects, including locally developed submarines.

The wider budget also covers veterans and Taiwan’s Coast Guard, which supports the navy in protecting the island’s maritime areas.

Parliament Holds the Next Test

The spending package, approved by Lai’s cabinet, must now pass through the Legislative Yuan, where Taiwan’s two main opposition parties hold control.

Those parties have said they support defense spending but oppose giving the administration an unrestricted mandate over military expenditure.

Political disputes delayed approval of the 2026 budget until last Friday. In May, parliament approved an additional $25bn in defense spending, about two-thirds of the amount the government sought, while excluding funding for some domestic programs, including drones.

The latest proposal therefore sets up another contest over the scale and allocation of Taiwan’s military budget.

China Pressure Shapes Spending Push

The spending increase comes as Chinese military and political pressure around Taiwan continues.

Beijing claims sovereignty over Taiwan, a position rejected by Taipei, and Chinese military forces operate regularly in the waters and skies surrounding the island.

Recent Chinese activity has included operations in waters east of Taiwan and coastguard patrols in the Pacific. Exercises around the island have also prompted concern in Taipei over preparations for a possible maritime blockade and disruption to shipping routes.

Taiwan concluded its annual Han Kuang exercises last week, including simulations of efforts to break such a blockade.

China’s defense ministry dismissed the drills as a “wasteful charade” that “stoked war panic”.

Washington Presses for Higher Outlays

The budget would also move Taiwan beyond the 3 percent of GDP threshold as Washington presses partners in the region to shoulder a larger share of their own defense costs.

Lai has embraced calls for increased military expenditure, but uncertainty over Washington’s regional security posture has become another factor in Taipei’s calculations.

The Trump administration announced a record $11.1bn arms sale to Taiwan last year, while a further $14bn package remains awaiting approval.

The proposed 2027 budget would also deepen Taiwan’s investment in military capability, with drones and missiles emerging as central priorities in the spending increase.