Within the American setup, the National Defence Authorisation Act (NDAA), enacted annually, outlines Congress’s intention for the Department of Defence (now the Department of War) and other security-related agencies to spend for the forthcoming financial year. It is the key legislative instrument that articulates the country’s strategic priorities and authorizes the allocation of its resources to achieve these objectives.
Major Themes of the NDAA 2026
President Trump signed the NDAA for FY2026 into law in late December, with a total scope of over $900 billion. This was marginally higher than the NDAA passed last year under the Biden administration, with an appropriation of $895 billion.
While the central theme of NDAA 2025 was ‘investing in the troops’ with an emphasis on the quality of life owing to improvements in pay and benefits, the NDAA 2026 emphasises Pentagon and administration reform, coupled with a roadmap for reinvigorating the domestic defence industry.
The legislation aims at extensive reform of the DoW’s acquisition procedures. From the manner of engagement with defence contractors and small businesses to how contracts are awarded and various requirement standards are agreed upon, the law seeks to achieve a comprehensive overhaul of the US defence acquisition system, which is often criticised for being slow, bureaucratic, and unresponsive. This assessment is particularly important for the US, given its comparison to the rapid innovation and adoption cycles in China.
With the continued congressional push towards modernisation and military readiness, the legislation aims to give due importance to emerging and dual-use technologies like AI and autonomous systems in the military context. Reflecting Congressional concerns of maintaining technological edge over its strategic rivals, NDAA 2026 prioritises the adoption and integration of AI across military operations, logistics, and mission-critical applications. Crucially, provisions also deal with workforce development and capacity building in AI through education, cybersecurity training and experimental learning.
Next, a strong emphasis has been put on developing appropriate Counter-UAS (Unmanned Aircraft Systems) and Counter-drone capabilities to address the changing nature of warfare globally. The NDAA has underscored the need for layered and integrated counter-UAS architectures to improve detection, identification, and neutralisation across air, land, maritime, and urban environments. To achieve this, it has sanctioned investments in kinetic interceptors, cyber-based disruption and jamming systems, and directed energy weapons, among others. To achieve synergy, the law has centralised military counter-UAS efforts under the Joint Interagency Task Force 401, which coordinates strategy, validates counter-drone systems, and oversees procurement.
Crucially, NDAA 2026 has placed renewed emphasis on strengthening the resilience and reliability of the US defence supply chain in the face of strategic competition and global disruption, with the ambition of overcoming logistical bottlenecks and pandemic-era shortages. First, it focuses on diversification of suppliers and reducing “single-source risk”, the law demands DoW to expand the list of qualified suppliers for items that are critical for readiness, maintenance, and deployment. Second, it asks of the DoW to develop an Expedited Acceptance and Qualification Process for critical items so that new suppliers can meet standards without delay. Third, the legislation also instructs the DoW to prioritise domestic development of materials and systems while restricting dependence and procurement of certain goods from countries that are deemed as strategic competitors. Ultimately, it nudges the Department to adopt greater transparency and data-driven risk management, enabling it to address vulnerabilities better and respond to emerging risks globally.
In a critical departure from previous NDAAs, the document explicitly mentions the Indo-Pacific as the primary theatre of execution of all the upcoming reforms. To achieve that, it also aims to reform the Pacific Deterrence Initiative (PDI), an initiative aimed at deterring Chinese transgressions in the Indo-Pacific. It now increases Congressional tightening on how the funds translate into capability and infrastructure on the ground.
In summary, the NDAA FY2026 seeks to integrate national security concerns with tech, reform and private capital markets. Built on the pillars of acquisition reform, reinvigorating the industrial base, and a special focus on emerging tech, it pushes the Pentagon towards enhanced integration of commercial innovation and force capabilities.
That said, challenges loom. Basic implementation challenges persist, as reforming entrenched acquisition procedures is difficult, since it requires long-term institutional and attitudinal changes, that extend beyond just statutory backing. Additionally, balancing immediate operational readiness with long-term structural transformation could prove to be a functional barrier.
Implications for India
The NDAA’s emphasis on reforming dated practices could create new avenues for cooperation with India. The law seeks to reduce the rigidity of the US defence acquisition ecosystem, which could, in turn, open doors for participation of Indian private-sector firms and joint ventures. As it pushes the US Govt to reduce dependencies on single sources, India could position itself as an attractive partner due to its skilled workforce and growing industrial base.
Under the US-India Initiative on Critical and Emerging Technology (iCET), the two countries can explore joint-production in areas such as aerospace components, electronics, and unmanned systems. The NDAA’s prioritisation of rapid adoption of emerging tech could increase the feasibility of joint R&D and shared testing of dual-use technologies, where India’s strengths in software and engineering could complement US hardware and operational experience. Certain initiatives are already underway in this regard. For instance, the JSW-Shield AI Partnership signed last month, which aims to establish a drone manufacturing unit in India producing US drone systems under license and technology transfer. Seven Indian startups were also chosen in January 2025 to work with the US Defence Innovation Unit and DoW on satellite observation and emerging space tech.
As the NDAA continues to posit China as the US’s primary adversary, while vying for functional alliances in the Indo-Pacific, it could create strategic space for India to operate under that umbrella. In that regard, transactional defence interests between the two can be leveraged as defence cooperation between India and the US has remained one of the bright spots in the bilateral relationship over the past year.
Conclusion
The NDAA for FY2026 is not merely a budgetary allocation, but a policy signal to the industry, markets, and international partners on how the US system interprets the evolving nature of global conflicts and their attempt to counter the same. It must be appreciated for its emphasis on reform, transparency, and simplification of established processes. The legislation also signals bipartisan continuity in strategic priorities, as evidenced by the scale of support from both sides of the US Congress.Within the American setup, the National Defence Authorisation Act (NDAA), enacted annually, outlines Congress’s intention for the Department of Defence (now the Department of War) and other security-related agencies to spend for the forthcoming financial year. It is the key legislative instrument that articulates the country’s strategic priorities and authorizes the allocation of its resources to achieve these objectives.
