India Defence Budget: On Sunday, India announced a very large increase in money for defence for the year 2026-27. The government has set aside Rs 7,84,678 crore for defence, which is much higher than last year’s Rs 6.81 lakh crore which is a rise of about 15%. The main reason for this increase is to make the military stronger, especially as India faces security pressure from China and Pakistan.
Defence Minister Rajnath Singh said the higher budget comes after the “historic success of Operation Sindoor” and shows strong intent to improve the country’s safety. He said, “Coming after the historic success of Operation Sindoor, this budget has further strengthened our resolve to make the country’s defence system even more robust.” He also thanked the Prime Minister and said, “I express my heartfelt gratitude to our Prime Minister Modi ji for allocating Rs 7.85 lakh crore for the defence sector.”
Vizag Naval Trifecta 2026: Dates, Events, Full Schedule, MILAN, IFR & IONS Details
Money for weapons, aircraft, and Indian companies
Out of the total defence budget, Rs 2,19,306 crore is kept for capital spending by the armed forces. This money will be used to buy things like new weapons, planes, ships, and other military equipment. This part of the budget is 21.84% higher than what was planned for 2025-26. Within this amount, Rs 63,733 crore is meant for aircraft and aero engines, and Rs 25,023 crore is for the navy’s ships and fleet.
The capital outlay this time is more than Rs 39,000 crore higher than last year’s planned amount of Rs 1.80 lakh crore. The revised capital outlay for 2025-26 was Rs 1,86,454 crore. The defence ministry also said that Rs 1.39 lakh crore, which is 75% of the capital purchase budget, will be used to buy equipment from Indian companies in 2026-27. This shows a strong push to support local defence industries.
The defence budget is now around 2% of India’s estimated GDP. It has gone up by 15.19% compared to the budget estimate for 2025-26. Defence spending also makes up 14.67% of the Union government’s total planned spending, which is the highest among all ministries. Revenue spending has been fixed at Rs 5,53,668 crore, and this includes Rs 1,71,338 crore for pensions.
Support for Defence Industry
In her budget speech, Finance Minister Nirmala Sitharaman announced some tax relief steps for the aviation and defence sectors. She proposed removing basic customs duty on parts needed to make civilian, training, and other aircraft. She also said basic customs duty will be removed on raw materials used to make aircraft parts for maintenance, repair, and overhaul work by defence units.
HAL-Yakovlev Deal Set to Reshape Indian Aviation | Explained
The defence industry welcomed the budget. Ankur Kanaglekar, vice-president of Thales’ India operations, said the spending shows strong focus on upgrading the armed forces.
He said, “The announcements around exemption of basic customs duty on components and parts for the manufacture of civilian, training and other aircraft and on the raw materials imported for the manufacture of parts to be used in maintenance, repair and overhaul by defence sector units, further signals India’s long-term strategic intent for strengthening civil aerospace and defence industrial capabilities.” He added, “We firmly believe that our collective efforts will strengthen India’s industrial base and firmly establish the nation as a major player in global aerospace and defence manufacturing.”
Improvements of Road
The government also repeated its promise to improve roads and buildings in border areas. The Border Roads Organisation will get Rs 7,394 crore for capital spending in 2026-27, which is higher than Rs 7,146 crore this year. The Defence Research and Development Organisation will also get more money. Its budget has been raised to Rs 29,100 crore from Rs 26,816.82 crore in 2025-26, with Rs 17,250.25 crore meant for capital spending.
Ex-servicemen have also been given attention. The Ex-Servicemen Contributory Health Scheme will receive Rs 12,100 crore, which is 45.49% more than this year. Rajnath Singh said, “The most important aspect of this Budget is the modernisation of our three services.”
He explained, “For this, a provision of Rs 1.85 lakh crore has been made this year, which is approximately 24 per cent higher than the previous financial year.” He added, “As a result of this increase, our military capability will become even more powerful.”
Speaking about former soldiers and their families, he said, “Under the Ex-Servicemen Contributory Health Scheme, a provision of Rs 12,100 crore has been made, which is an increase of approximately 45 per cent compared to the current year.” He also said, “This budget strengthens the balance between security, development, and self-reliance.”
