Defence Budget 2026: For FY 2025-26, the government allocated Rs 6.81 lakh crore to the Ministry of Defence, an increase of 9.53 per cent from the previous FY. Of this, Rs 1.80 lakh crore was allocated on capital outlay.
Operation Sindoor, which the Modi government has repeatedly stated has only been paused and not concluded, saw an extensive use of drones and unmanned aerial vehicles (UAVs), demonstrating how modern warfare has evolved over the years. India’s entire campaign, hailed by both the political and military leadership for the synergy between all three services, was solely focused on achieving clearly defined targets and delivering New Delhi’s strong message against terrorism to Islamabad and its leadership.
Even though the Indian military had a clear advantage over the Pakistani forces, it has once again brought the focus to one aspect: further modernising the Indian Armed Forces.
Why does India need to further modernise its forces?
Traditional wars were mainly fought using tanks, artillery and infantry, and with clear frontlines. However, today’s warfare involves drones, UAVs, loitering munitions, etc, which was quite evident during Operation Sindoor. Additionally, the Indian Armed Forces still use equipment that is 30 to 40 years old, which can safely be said to have become or may soon become obsolete. Considering this, the Defence Ministry has sought a 20 per cent hike for itself in this year’s budget.
Defence Ministry’s demand
Generally, it has been a trend in India to increase the defence budget by 9 to 10 per cent every year. But, speaking at a Federation of Indian Chambers of Commerce and Industry (FICCI) event in New Delhi in November last year, Defence Secretary Rajesh Kumar Singh said the defence ministry will seek a 20 per cent hike in the defence budget for the financial year (FY) 2026-27 to meet the growing requirements of the armed forces.
“I don’t see any difficulties in getting that kind of an allocation [20 per cent more] from the finance ministry. Given the growing, diversified industrial base that this country has in the defence space, we have the absorptive capacity to utilise those additional resources that we are seeking,” the defence secretary had said.
20 per cent hike a reality or far-fetched target
There is hardly any doubt that India needs to allocate more funds to the defence sector, considering the demands of the armed forces and the current geopolitical situation in the neighbourhood. But analysts and experts have pointed out that India first needs to build the capacity to absorb this expenditure.
Speaking to India TV Digital, a former Indian Navy officer said that a 20 per cent hike is “way too ambitious” and “far-fetched” if one looks only at past budget patterns. The official, who served as former Flag Officer Naval Aviation, said that the defence ministry’s demand will unlikely be fully met in one go or in the near to medium term.
“At the same time, such a demand should be read more as a signal than a forecast,” the official told India TV Digital on condition of anonymity. “It reflects the pressure the system is under after Operation Sindoor and the recognition that incremental increases may no longer be enough to arrest capability gaps.”
The ex-Naval officer said that without making changes in how defence spending is planned and absorbed, even a 20 per cent hike would struggle to deliver proportional results.
“The real question is not whether 20 per cent will be granted, but whether the increase that does come is multi-year and predictable, and it is structured to support long-term capability, not just meet immediate pressures,” he said.
A former Indian Air Force officer also agreed with it while also calling for reforms in the Defence Research and Development Organisation (DRDO). When asked about reports that the IAF’s proportional share could rise in the Defence Budget 2026-27, compared to that of the Army, he said it needs to be increased, keeping in view the induction of multi-role fighter aircraft (MRFA) and air defence equipment.
“The increase in revenue expenditure because of legacy equipment for which you can’t get spares and the increased revenue expenditure for new inductions are responsible for this,” the ex-IAF officer told India TV Digital when asked about India’s capex expenditure.
India’s defence spending in 2025-26
For FY 2025-26, the government allocated Rs 6.81 lakh crore to the Ministry of Defence, an increase of 9.53 per cent from the previous FY. Of this, Rs 1.80 lakh crore was allocated on capital outlay. This allocation was 4.65 per cent higher than the previous budget.
Out of this, Rs 1.48 lakh crore was reserved for capital acquisition and Rs 31,000 crore for capital expenditure on Research and Development (R&D), and creation of infrastructural assets across the country. The government also allocated Rs 26,000 crore to the DRDO, of which Rs 14,900 crore was allocated for capital expenditure and to fund the R&D projects.
