India’s Defence Budget Reaches New Heights in 2026-27
The Union Budget for 2026-27, unveiled by the central government on February 1, has set a record with an unprecedented allocation of ₹7.85 lakh crore to the Ministry of Defence. This figure represents a notable increase of 15.19% over the previous fiscal year’s estimates, reinforcing the government’s commitment to national security and defense modernization. Notably, this allocation accounts for 14.67% of the total Union Budget, positioning it as the largest among all ministries.
Over the past decade, India’s defense budget has significantly expanded, climbing from ₹2.53 lakh crore in 2013-14 to ₹7.85 lakh crore in 2026-27—an increase of approximately ₹5.32 lakh crore, showcasing a nearly threefold rise in budget support.
Focus on Modernization and Capability Enhancement
The budget emphasizes a comprehensive modernization strategy across all three branches of the Armed Forces. Aimed at strengthening India’s defense capabilities, the capital expenditure allocation for the upcoming fiscal year has been set at over ₹2.19 lakh crore, up by 21.84% from budget estimates in FY 2025-26. Within this, ₹1.85 lakh crore is specifically earmarked for capital acquisition, marking an increase of around 24% from last year.
These capital acquisitions will enable the Armed Forces to procure next-generation fighter aircraft, advanced weaponry, naval vessels, unmanned aerial vehicles, and drones. Additionally, funding for the Border Roads Organisation (BRO) has surged to ₹7,394 crore, facilitating the modernization of crucial military infrastructure such as tunnels, bridges, and airfields.
Encouraging Indigenous Manufacturing
The budget also highlights a robust commitment to promoting indigenous defense manufacturing, aligning with the _Aatmanirbhar Bharat_ initiative. To support this goal, ₹1.39 lakh crore has been allocated for procurement from domestic defense industries, with approximately 75% of the capital acquisition budget reserved for local manufacturers. This step aims to diminish reliance on imports while fostering domestic production and job creation.
Furthermore, the budget proposes exemptions on basic customs duty for raw materials imported for aircraft manufacturing, bolstering the capabilities of defense units in maintenance and repair processes.
Investing in Research and Development
The Defence Research and Development Organisation (DRDO) has also seen a significant budgetary increase to ₹29,100.25 crore, up from ₹26,816.82 crore in the previous fiscal year. A crucial portion of this funding—₹17,250.25 crore—is allocated for capital expenditure, underscoring the government’s focus on innovation in defense technologies.
Key initiatives include opening about 25% of the Defence R&D budget to industry and academic collaborations, aiming to stimulate innovation within the sector. Notably, 15 centres of excellence have been established, covering 82 research verticals, fostering a synergy between DRDO, industry, and academia.
Welfare Initiatives for Veterans
In a commendable move towards veteran care, the budget allocates ₹12,100 crore to the Ex-Servicemen Contributory Health Scheme (ECHS), reflecting a massive increase of 45.49% compared to last fiscal year’s estimates. This scheme supports medical treatment expenditures for veterans and their families, ensuring improved healthcare services.
The total allocation for defense pensions is set to exceed ₹1.71 lakh crore, a 6.56% rise from the previous year, ensuring timely disbursements to over 34 lakh pensioners through modernized systems.
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