Budget 2026-27: Defence Ministry gets Rs 7.8 lakh crore, 15% hike

The Centre allocated Rs 7.8 lakh crore to the Defence Ministry for 2026-27, a 15% overall increase. The capital outlay for modernisation saw a 21.84% hike to Rs 2.19 lakh crore for projects like Rafale jets and submarines.

Defence Sector Gets Major Budgetary Push

The Centre allocated a budget of Rs 7.8 lakh crore to the Defence Ministry for the year 2026-27.

Defence forces will receive Rs 2.19 lakh crore for modernisation under the Capital Outlay budget.

Overall, the defence ministry will see a 15 percent increase in its budgetary allotment. In FY26-27, there is a 21.84 percent increase in capital outlay hiked from Rs 1.80 lakh crore in FY 25-25 to Rs 2.19 lakh crore.

The Defence Ministry has major projects in the pipeline, such as contracts for Rafale fighter jets, submarines, and unmanned aerial vehicles.

The Defence budget (civil) has been reduced by 0.45 per cent as compared to last year's Rs 28,554.61 crore.

Meanwhile, the Defence Services (Revenue) and Capital Outlay were allocated Rs 3,65,478.98 crore and Rs 2,19,306.47 crore, respectively, reflecting jumps of 17.24 per cent and 21.84 per cent. The allocation for Defence Pensions also saw a rise, with the Centre allotting Rs 1,71,338.22 crore.

FM Announces Key Customs Duty Reforms

In a boost to the defence sector, Union Finance Minister Nirmala Sitharaman announced, "It is proposed to exempt basic customs duty on raw materials imported for the manufacture of parts of aircraft to be used in maintenance, repair or overall requirements by units in the defence sector."

Changes in Import Tariffs

Meanwhile, in response to the US tariffs, FM Nirmala Sitharaman proposed reducing the tariff rate on all dutiable goods imported for personal use from 20 per cent to 10 per cent.

Measures to Boost Exports

In line with the government's aim to promote exports and lift the seafood industry hit by US tariffs, FM Sitharaman propose to increase the limit for duty-free imports of specified inputs used for processing seafood for export from the current one per cent to three per cent of the FOB value of the previous year's export turnover.

Union FM Nirmala Sitharaman said, "I propose to increase the limit for duty-free imports of specified inputs used for processing sea foods for export from the current one per cent to three per cent of the FOB value of the previous year's export turnover. I also propose to allow duty-free imports of specified inputs, which is currently available for exports of leather or synthetic footwear to exports of shoe uppers as well."

Support for Domestic Manufacturing

The Finance Minister proposed a basic customs duty exemption to capital goods used for manufacturing lithium-ion cells for batteries and critical minerals.

FM Sitharaman presented the Union Budget for the record ninth time.

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