Defence Minister Singh described modernisation as the most important feature of the budget. He said nearly Rs 1.85 lakh crore has been earmarked specifically for upgrading the Army, Navy and Air Force, which is about 24 per cent higher than the previous year.
India has significantly increased its defence budget for the financial year 2026–27, allocating Rs 7.84 lakh crore to strengthen the armed forces and boost military modernisation. The new allocation marks a 15 per cent rise compared to the Rs 6.81 lakh crore provided in the current financial year.
The government said the higher outlay reflects India’s evolving security needs, particularly in light of challenges along its borders with China and Pakistan. Defence Minister Rajnath Singh said the budget reinforces the country’s determination to build a stronger defence system, especially after the “historic success of Operation Sindoor”.
Rs 2.19 crore set aside for capital expenditure
A major part of the increased budget has been directed towards capital expenditure. The armed forces have been allotted Rs 2,19,306 crore for capital spending, which covers the purchase of new weapons, aircraft, warships and other advanced military equipment. This is more than Rs 39,000 crore higher than the capital allocation in the current fiscal year.
The revised estimate for capital expenditure in 2025–26 stands at Rs 1,86,454 crore, while the budgeted figure for that year was Rs 1.80 lakh crore. For 2026–27, Rs 63,733 crore has been set aside for aircraft and aero engines, and Rs 25,023 crore has been allocated for strengthening the naval fleet.
Revenue expenditure gets 5.53 crore
Revenue expenditure for the defence sector has been fixed at Rs 5,53,668 crore. This includes Rs 1,71,338 crore for pensions, highlighting the continued focus on meeting the needs of serving personnel and veterans.
Finance Minister Nirmala Sitharaman also announced measures to support the defence and aerospace industry. In her budget speech, she proposed exempting basic customs duty on components and parts used to manufacture civilian, training and other aircraft. Customs duty on raw materials imported for maintenance, repair and overhaul work in the defence sector will also be waived.
According to the government, these steps are expected to provide a boost to domestic defence manufacturing and aerospace development.
Defence Minister Singh described modernisation as the most important feature of the budget. He said nearly Rs 1.85 lakh crore has been earmarked specifically for upgrading the Army, Navy and Air Force, which is about 24 per cent higher than the previous year. This, he added, would further enhance India’s military strength.
The welfare of ex-servicemen has also received attention. A provision of Rs 12,100 crore has been made for the Ex-Servicemen Contributory Health Scheme, an increase of around 45 per cent over the current year’s allocation.
Overall, the defence budget for 2026–27 accounts for nearly two per cent of India’s projected gross domestic product. The Defence Ministry said the outlay is aimed at improving modernisation, encouraging technological innovation and ensuring more efficient use of resources through streamlined procurement processes.
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