- India's defence modernisation budget for FY2026/27 rose by 21.84 per cent to Rs 2.19 lakh crore
- Capital outlay includes Rs 63,733 crore for aircraft and aero engines in the new budget
- Defence services revenue budget hiked by 17.24 per cent for operations and maintenance costs
India's military was given Rs 2.19 lakh crore - an increase of 21.84 per cent - for modernisation in FY2026/27 in the union budget presented by Finance Minister Nirmala Sitharaman Sunday afternoon.
In FY26 the budget for the Defence Ministry's capital outlay was Rs 1.8 lakh crore.
Capex allocations include Rs 63,733 crore for aircraft and aero engines.
In addition, budgetary allocation for defence services (revenue), i.e., the portion of the defence budget set aside for day-to-day operations, including maintenance, recurring expenses like ammunition, fuel, repairs, etc, and salaries of support staff - was hiked by 17.24 per cent.
And the allocation for pensions was hiked by 6.53 per cent to Rs 1.71 lakh crore.
Overall, the defence budget for the year was increased to Rs 7.85 lakh crore.
The increased figure is 11 per cent of the GDP, up from eight per cent in FY26.
"...this budget, following the historic success of Operation Sindoor, has reinforced our resolve to further strengthen the country's defence system.... this budget strengthens the balance between security, development, and self-reliance..." Defence Minister Rajnath Singh said after speech.
In her speech Sitharaman proposed the waiving of basic customs duty on raw materials imported for manufacture of parts of aircraft to be used in maintenance, repair, or overhaul requirements by units in the defence sector.
Increased spending on the armed forces was not unexpected after Operation Sindoor, the first military clash with Pakistan since the 1971 war between the two countries. In the build-up to the budget speech today sources told NDTV the Defence Ministry wanted a 20 per cent hike.
In fact, in May last year sources said an increase of Rs 50,000 crore was mooted.
RECAP | Rs 50,000 Crore Boost For Military After Operation Sindoor: Sources
The hike, as it turned out, was even bigger than that.
A record Rs 6.81 lakh crore had been set aside for the armed forces in 2025/26, which represented a 9.2 per cent increase from the Rs 6.22 lakh crore the year before.
Reports indicate India's defence spending has jumped by over 40 per cent in the past 26 years, with defence capex expenditure one of the focus areas. This is in line with the government's push for an 'aatmanirbhar Bharat', or self-reliant India by encouraging indigenous research and manufacturing.
The focus has also been on increased revenue from defence exports.
