Defence gets a big boost
Giving top priority to national security, defence outlay for the next fiscal has seen a big jump of nearly 16 per cent with a massive INR 7,84,678 crore allocation. The first budget after Operation Sindoor also marks a massive 24 per cent hike in capital expenditure with special focus on self-reliance and sustaining the pace of modernisation for operational readiness.
The total budget of INR 7,84,678 crore announced by Finance Minister Nirmala Sitharaman on Sunday for the next fiscal is more than last year’s allocation of INR 6,81,210 crore. The total defence outlay stands at two per cent of the estimated GDP for the next Financial Year and shows a significant increase of 15.19 per cent over the Budgetary Estimates (BE) of FY 2025-26.
The total defence budget is 14.67 per cent of the Union Government expenditure and is the highest among the ministries.Indicating the Government’s intention to provide best weapons and equipment to the armed forces to fight next generation wars, the total capital outlay is pegged at INR 2,19,306 crore.
In 2025-26, the Government allocated INR 6,81,210 for defence budget. The capital outlay was pegged at INR 1,80,000 crore which increased to INR 1,86,454 crore at revised estimate stage.
Under capital expenditure for next fiscal, INR 63,733 crore has been set aside for aircraft and aero engines while INR 25,023 crore is allocated for the naval fleet.
Defence Minister Rajnath Singh thanked Prime Minister Narendra Modi for allocating INR 7.85 lakh crore to the defence sector, stating that the budget strengthens the security-development-self-reliance balance, and it is in the best interest of the nation.
The budgetary provision made in this regard for the upcoming FY will facilitate procurement of operationally important stores, spare parts etc. and will ensure maintenance of vital platforms in addition to catering for their day-to-day requirements.
Reiterating its commitment to providing better infrastructure in border areas through higher allocation to the Border Roads Organisation (BRO), the budgetary allocation to it for 2026-27 has been enhanced to INR 7,394 crore from INR 7,146.50 crore for FY 2025-26. The allocation will cater to many strategically significant projects such as tunnels, bridges, airfields, etc. and will promote regional development and tourism, along with providing last mile connectivity in the border areas.
The budgetary allocation to Defence Research and Development Organisation (DRDO) has been increased to INR 29,100.25 crore in FY 2026-27 from INR 26,816.82 crore in FY 2025-26. Out of this allocation, a major share of INR 17,250.25 crore is allocated for capital expenditure.
Total budgetary allocation on account of defence pensions stands at INR 1,71,338.22 crore, which is 6.56 per cent higher than the allocation made during 2025-26 at BE stage. It will be spent on the disbursement of monthly pension to more than 34 lakh pensioners through SPARSH and other pension disbursing authorities.
In her budget speech, Sitharaman also proposed exempting basic customs duty on components and parts required for the manufacture of civilian, training and other aircraft.
She also announced to waive basic customs duty on raw materials imported for manufacture of parts of aircraft to be used in maintenance, repair, or overhaul requirements by units in the defence sector. The two decisions are expected to help the defence aerospace industry.
