The Federation of Indian Chambers of Commerce and Industry (FICCI) has urged the government to elevate the capital outlay share within the Defence Budget to 30 per cent from the current 26 per cent in the forthcoming Union Budget 2026.

This recommendation forms part of FICCI's pre-Budget memorandum, which underscores the imperative for heightened investment amid escalating global uncertainties and rapid advancements in military technologies by adversaries.

In Budget 2025, the Ministry of Defence received an allocation of ₹6,81,210.27 crore for FY 2025–26, reflecting a 9.53 per cent increase over the previous year's Budget Estimates. FICCI advocates sustaining approximately 10 per cent overall growth in defence budgetary support while prioritising capital expenditure to modernise military infrastructure, particularly frontline assets such as UAVs, counter-UAV systems, electronic warfare capabilities, and air defence systems along border regions.

Such enhanced capital outlay would directly bolster India's strategic autonomy and territorial integrity, aligning with the 'Atmanirbharta' initiative for self-reliance in defence production.

FICCI further proposes augmenting the Defence Research and Development Organisation's (DRDO) budget by an additional ₹10,000 crore, building on last year's 12.4 per cent rise to ₹26,816.82 crore. This infusion aims to empower DRDO in spearheading fundamental research into frontier technologies, fostering collaborations with private entities via schemes like the Technology Development Fund.

These measures would accelerate deep-tech innovations, including AI-enabled systems and advanced sensors, positioning India as a formidable player in defence exports, which have already achieved a 46 per cent compound annual growth rate from 2016–17 to 2023–24.

Complementing these fiscal pushes, FICCI advocates synchronising defence initiatives with the 'Purvodaya Scheme' to revitalise industrial clusters in Eastern India. This approach promises job creation, stimulated R&D, and enhanced export hubs, thereby securing national interests across all borders.

FICCI's four-pronged strategy—encompassing capital outlay expansion, DRDO fortification, export impetus, and regional industrial rejuvenation—reframes defence spending as a catalyst for economic growth rather than mere expenditure.

By embedding technology-driven innovation at the core, these recommendations address geopolitical risks while catalysing indigenous capabilities in a volatile global landscape.

​Agenices