The Indian government has significantly ramped up defence spending in Budget 2026, allocating a total of ₹7.85 lakh crore to the Defence Ministry for FY26-27, marking a robust 15 per cent increase over the previous year.

This enhanced outlay underscores New Delhi's commitment to bolstering military capabilities amid escalating tensions with Pakistan and China along the borders.

A key highlight is the sharp focus on capital expenditure, which has surged by 21.84 per cent to ₹2.19 lakh crore from ₹1.80 lakh crore last fiscal. This jump prioritises modernisation efforts, enabling the procurement of cutting-edge equipment to address operational gaps in the Indian Armed Forces.

Under this capital head, ₹63,733 crore has been earmarked specifically for aircraft and aero engines. This substantial provision aligns with ongoing high-value acquisitions, including additional Rafale fighter jets, aimed at enhancing the Indian Air Force's air superiority against adversarial threats from Islamabad and Beijing.

Complementing the aerial push, ₹25,023 crore has been set aside for strengthening the naval fleet. These funds will support critical projects such as new submarines and unmanned aerial vehicles, fortifying India's maritime domain awareness and power projection in the Indian Ocean Region.

Defence Services (Revenue) received ₹3,65,478.98 crore, reflecting a 17.24 per cent increase to sustain day-to-day operations and personnel readiness. Meanwhile, Defence Pensions have been allocated Rs 1,71,338.22 crore, providing financial security to retirees and acknowledging their service.

In a strategic move for indigenous manufacturing, Finance Minister Nirmala Sitharaman proposed exempting basic customs duty on raw materials imported for aircraft parts used in maintenance, repair, or overhaul by defence units. This incentive is poised to lower costs and accelerate self-reliance in the aerospace sector.

Defence Secretary Rajesh Kumar Singh welcomed the allocations, terming them a "significant boost" for national preparedness. He emphasised the 21 per cent rise in capital expenditure to ₹2.9 lakh crore, noting its role in acquiring modern equipment and technological upgrades for the armed forces.

Singh highlighted that these funds will directly enhance operational capabilities, particularly in modernisation. "The overall budget for the Ministry of Defence is going to be ₹7.85 lakh crores, which is a 15 per cent increase over last year," he stated, underscoring the transformative impact on force multipliers.

Notably, the Defence budget (civil) saw a marginal dip of 0.45 per cent to below last year's ₹28,554.61 crore. However, this minor adjustment pales against the gains in core military spending, ensuring resources flow to frontline priorities.

This budgetary thrust comes at a pivotal juncture, with India pursuing multi-front deterrence. The Rafale deals, alongside indigenous platforms like TEJAS MK-2 and engine development programmes, signal a balanced approach blending imports with Atmanirbharta to counter Pakistan's evolving air assets and China's expanding regional footprint.

Budget 2026 positions the defence sector for accelerated growth, fostering private sector participation and technological innovation. It reaffirms the government's resolve to equip the tri-services with superior firepower, ensuring strategic equilibrium in an unpredictable geopolitical landscape.

Aencies