Defence Ministry allocated record Rs 7.85 lakh crore in Union Budget 2026-27
The Ministry of Defence has been allocated an all-time high outlay of ₹7.85 lakh crore in the Union Budget 2026-27, marking a significant increase of over 15 per cent compared to the Budget Estimates of FY 2025-26. The allocation, which amounts to about 2 per cent of the estimated GDP, is the highest among all Union ministries and accounts for 14.67 per cent of the total Central Government expenditure.
The enhanced allocation comes in the backdrop of heightened security requirements following Operation Sindoor and reflects the government’s continued focus on strengthening military preparedness, modernisation, and self-reliance in defence manufacturing.
A major highlight of the defence budget is the record ₹2.19 lakh crore allocation under the capital head, representing a quantum jump of nearly 24 per cent over the previous year’s Budget Estimates. Of this, about ₹1.85 lakh crore has been earmarked for capital acquisition to fund procurement of next-generation fighter aircraft, ships and submarines, unmanned aerial vehicles, drones, smart weapons, specialist vehicles and other advanced platforms.
The capital outlay is aimed at equipping the Armed Forces with cutting-edge capabilities amid evolving geopolitical challenges. During FY 2025-26, the Defence Ministry has already concluded contracts worth ₹2.10 lakh crore and accorded Acceptance of Necessity approvals exceeding ₹3.50 lakh crore.
Reaffirming its commitment to indigenisation, the government has earmarked ₹1.39 lakh crore – around 75 per cent of the capital acquisition budget – for procurement from domestic industries, including private sector players. The move is expected to boost India’s defence manufacturing ecosystem, encourage long-term investments, strengthen supply chains and generate employment through ancillary industries.
The emphasis on domestic procurement reflects lessons drawn from global supply chain disruptions and underlines the strategic need for import substitution and self-reliance in defence production.
The defence budget provides ₹3.65 lakh crore for revenue expenditure, an increase of over 17 per cent compared to FY 2025–26. Of this, ₹1.58 lakh crore has been allocated for operational readiness and sustenance, including procurement of spares, ammunition and essential stores, as well as maintenance of critical platforms. The remaining amount will cater to pay and allowances of defence personnel.
The Budget also reinforces the government’s focus on border area development. Allocation to the Border Roads Organisation (BRO) under the capital head has been increased to ₹7,394 crore for FY 2026–27. The funds will support construction of strategically important tunnels, bridges, airfields and roads, enhancing last-mile connectivity, regional development and tourism in border areas.
Underscoring its commitment to the welfare of ex-servicemen, the government has significantly enhanced the allocation for the Ex-Servicemen Contributory Health Scheme (ECHS) to ₹12,100 crore, a rise of over 45 per cent compared to the previous year. The allocation will meet medical treatment expenses of veterans and their dependents. Over the last five years, ECHS funding has increased by more than 300 per cent.
The allocation for the Defence Research and Development Organisation (DRDO) has been raised to ₹29,100 crore in FY 2026–27, with a substantial portion earmarked for capital expenditure to support research, innovation and indigenous technology development.
Defence pensions have been allocated ₹1.71 lakh crore, an increase of over 6.5 per cent, benefiting more than 34 lakh pensioners through the SPARSH system and other disbursing authorities.
Reacting to the budget, Defence Minister Rajnath Singh thanked Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman, stating that the enhanced defence allocation strengthens the balance between security, development and self-reliance. He said the budget, inspired by the three ‘Kartavyas’, will accelerate inclusive growth, boost manufacturing and create sustainable infrastructure.
Calling it a “Yuva Shakti-driven Budget”, the Defence Minister said the allocation will further strengthen PM Modi’s vision of an Aatmanirbhar and Viksit Bharat, while reinforcing national security in the post–Operation Sindoor environment.
