Japan’s Defense Ministry has submitted a record ¥8.9 trillion (approximately $56 billion) budget request for fiscal 2027, marking the largest single-year proposal in its current five-year ¥43 trillion defense buildup plan. The figure is expected to increase further as Tokyo finalizes revisions to its three key national security documents—the National Security Strategy, National Defense Strategy, and Defense Buildup Program—by the end of the year.

The proposed budget reflects Japan’s efforts to modernize its military capabilities amid growing regional security challenges, with a focus on advanced technologies such as hypersonic underwater-launched cruise missiles and artificial intelligence (AI) systems. The ministry’s fiscal 2027 request highlights three primary objectives: preparing for emerging forms of warfare through AI and unmanned systems, ensuring sustained operational readiness for protracted conflicts, and strengthening the domestic defense industrial base.

Among the most notable elements is funding allocated toward developing “highly survivable” hypersonic cruise missiles that can be launched from submerged platforms. Officials suggested these weapons would likely be deployed via vertical-launch systems on next-generation Maritime Self-Defense Force (MSDF) submarines. Research is also planned for launching standoff missiles from uncrewed underwater vehicles (UUVs), though specific costs have yet to be disclosed due to ongoing strategic reviews. Experts argue that such underwater-launched weapons would enhance Japan’s counterstrike capabilities, particularly given the difficulty potential adversaries would face targeting these assets.

In addition to missile development, the budget emphasizes integrating AI into command and control. Planned initiatives include establishing an AI-based decision support system within the Joint Operations Command and deploying a sovereign cloud infrastructure to facilitate secure, rapid data sharing across the Self-Defense Forces. Although details on expenditures remain undisclosed, Defense Ministry officials noted a future transition from reliance on foreign AI technologies to domestically developed systems once maturity is achieved.

The ministry also continues to prioritize unmanned platforms, proposing expanded acquisition of diverse drone types. This includes approximately ¥8.7 billion for unmanned aerial vehicles (UAVs) dedicated to intelligence gathering, ¥36.3 billion for small attack drones, and ¥9.5 billion for uncrewed ground vehicles intended for logistical support. Analysts caution that achieving a transformative shift toward uncrewed systems will require addressing persistent personnel shortages within the Self-Defense Forces and potentially restructuring force composition by reallocating manpower from conventional platforms to drone operations.

In alignment with these modernization efforts, the budget outlines plans to enhance Japan’s defense industrial and technological base by creating a new government-led entity to oversee domestic production, facilitate defense equipment exports, and promote innovation. A key proposal includes adopting a government-owned, contractor-operated (GOCO) model, wherein the state would own certain defense facilities while private companies manage their operations.

Reflecting concerns over increased military activity by neighboring countries near Japan’s Pacific maritime routes, the ministry intends to bolster intelligence and surveillance capabilities. This includes deploying the MQ-9B SeaGuardian long-endurance UAV to the region in fiscal 2027 and accelerating the deployment of mobile warning and surveillance radar units to Okinawa’s Kitadajima Island. Additionally, the ministry plans to establish three new bureaus addressing international policy and cooperation, defense infrastructure and logistics, and facilities development. Support structures for retired Self-Defense Forces personnel and their families are also part of the proposed expansion.

While Japan currently allocates close to 2% of its gross domestic product to defense, the United States has urged Tokyo to increase this to 3.5%. The ministry’s current request is positioned within this geopolitical context, as Japan seeks to adapt to shifting regional dynamics and enhance its deterrence posture through technological innovation and strategic realignment.