India’s Defence Budget: The Indian government has allocated over ₹6.81 lakh crore to the Ministry of Defence (MoD) in the Union Budget for the financial year 2025-26. This is a 9.53% increase compared to the previous year’s budget and represents 13.45% of the total Union Budget, making it the highest among all ministries.
Of the total budget, ₹1,80,000 crore, which accounts for approximately 26.43%, is allocated for capital outlay, meaning it will be used for purchasing new equipment, infrastructure development, and modernization efforts. The allocation for revenue expenditure, which includes operational costs, maintenance, and salaries for armed forces personnel, is ₹3,11,732.30 crore, making up 45.76% of the total defence budget.
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The government has also increased the defence pension by 14%, allocating ₹1,60,795 crore for this purpose. According to The HansIndia, this pension budget, which accounts for 23.60% of the total allocation, will benefit approximately 34 lakh defence pensioners. The government has been implementing the One Rank One Pension (OROP) scheme since July 2014, revising it every five years. The third revision of OROP came into effect in July 2024 and was implemented on time.
Defence Minister Rajnath Singh praised Finance Minister Nirmala Sitharaman for presenting a budget that aligns with Prime Minister Narendra Modi’s vision of a developed India. He said, “This budget will promote the development of youth, poor, farmers, women, and all other sections of society. Recognising the contribution of the middle class, the budget has brought an unprecedented gift.”
The Ministry of Defence has decided to observe the financial year 2025-26 as the “Year of Reforms.” This initiative is aimed at modernizing the armed forces and simplifying the Defence Procurement Procedure to ensure the most effective use of the budget.
The capital outlay allocation of ₹1,80,000 crore is 4.65% higher than the budget estimate for 2024-25. Out of this, ₹1,48,722.80 crore has been set aside for capital acquisition, which is considered the modernization budget of the armed forces. The remaining ₹31,277.20 crore is designated for research and development (R&D) and creating new infrastructure across the country.
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The government has also increased the budget for the Defence Research and Development Organisation (DRDO) to ₹26,816.82 crore, a 12.41% increase from the ₹23,855.61 crore allocated in 2024-25. A major portion of this budget, ₹14,923.82 crore, is earmarked for capital expenditure and funding R&D projects.
To encourage innovation in defence, the government has allocated ₹449.62 crore to the Innovations for Defence Excellence (iDEX) scheme, which includes its sub-scheme, Acing Development of Innovative Technologies with iDEX (ADITI). This allocation is nearly three times higher than the funding provided two years ago.
For the welfare of ex-servicemen, the government has increased the allocation for the Ex-Servicemen Contributory Health Scheme (ECHS) to ₹8,317 crore, which is 19.38% higher than the 2024-25 budget. The Ministry of Defence stated, “During the mid-year review in the current financial year, additional allocation was made to meet the emergent requirements of medical treatment-related expenditure.”
The Indian Coast Guard (ICG) has also received an increased budget of ₹9,676.70 crore, which is 26.50% more than the allocation for 2024-25. The capital budget for the ICG has increased significantly, rising from ₹3,500 crore in 2024-25 to ₹5,000 crore in 2025-26. This boost in funding will support the acquisition of Advanced Light Helicopters (ALH), Dornier Aircraft, Fast Patrol Vessels (FPVs), Training Ships, and Interceptor Boats. The revenue budget for the ICG has also increased from ₹4,151.8 crore to ₹4,676.70 crore, reflecting a 12.64% rise.
The Border Roads Organisation (BRO), which plays a crucial role in strengthening border infrastructure and ensuring the movement of armed forces personnel through challenging terrains, has received ₹7,146.50 crore under the capital head. This marks a 9.74% increase compared to the 2024-25 budget.
Despite the increase in funding, analysts have pointed out that a significant portion of the defence budget is allocated to manpower costs, including salaries and pensions.
This leaves ₹1.80 trillion for capital outlay, which is focused on modernization and procurement. Experts have raised concerns that this amount may not be sufficient for India’s ambitious modernization plans, particularly in countering regional rivals.
