India's 2026-27 Union Budget allocates Rs 7.85 lakh crore for defence, a 15% increase from the previous year. The capital outlay for modernization rose by nearly 22% to Rs 2.19 lakh crore.
In the Union Budget 2026 presented on February 1, 2026 by Finance Minister Nirmala Sitharaman - the overall defence budget saw a quantum jump of around 15% to Rs 7.85 lakh crore in 2026-27 against Rs 6.80 lakh crore in the previous fiscal year.
The capital outlay for modernisation saw a jump of 21.84% at Rs 2.19 lakh crore for this fiscal against Rs 1.80 lakh crore in 2025-26.
A sharp increase in defence budget comes months after India had a conflict with Pakistan during Operation Sindoor in May last year.
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It should also be noted that there are some of the big-ticket projects in the pipelines, including Rafale fighter jets, submarines, and unmanned aerial vehicles, reinforcing India’s combat readiness and self-reliance.
According to Budget documents, the total allocation for the Ministry of Defence in FY27 covers defence services (revenue), capital outlay, defence pensions, and civil establishments under the ministry.
Of the FY26 allocation, defence services (revenue), which includes expenditure on salaries, allowances, maintenance, and operational preparedness accounted for Rs 3.66 lakh crore.
Out of the total Rs 2.19 lakh crore earmarked for the modernisation of the armed forces, the aircraft and aero-engines segment accounted for the highest allocation of 72,780 crore, followed by Rs 25,024 crore for naval fleet enhancement. In previous budget, these two segments had got Rs 63,734 crore and Rs 21,397 crore, respectively.
“The enhanced capital outlay signals the government's focus on the acquisition of advanced weapon systems and boosting domestic defence manufacturing,” an official said.
