Union Budget 2026: Defence Allocation Touches Record ₹7.84 Lakh Crore, Sees a 15.3% Jump, Focus on Modernisation and Preparedness

Key Points:

The Union Budget 2026 marks a significant growth in India’s defence sector, with an allocation of ₹7.84 lakh crores for the Ministry of Defence (MoD) in the fiscal year 2026-2027. This is an all time highest allocation for the MoD, marking a 15.3% increase from last year’s allocation of ₹6.81 lakh crores. The Defence Budget also accounts for 14.68% of the Union Budget-strengthening preparedness, driving innovation, and reinforcing India’s national security.

FM Sitharaman Presents Ninth Consecutive Budget

Union Finance Minister Nirmala Sitharaman presented the Union Budget 2026 in the Parliament today, i.e. Sunday, February 1, 2026. This is a significant development in the Indian political landscape because Finance Minister Sitharaman presented the budget for the ninth consecutive time, as the Ministry of Finance’s chief.

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India’s Defence Budget Moves Towards Indigenous Defence Production

India’s Defence Budget 2026-2027 marks a major move as India focuses on Atmanirbharta (Self-reliance), depicting indigenous production and manufacturing. India moves ahead with the procurement of high technological defence equipment and boosting indigenous defence production ecosystem in the Union Budget 2026. The budget also focuses on modernisation, technological innovation, and streamlined procurement for optimal resource utilisation. It marks an affirmative and a bold step towards a self-reliant future and being technologically advanced. 

Enhancing India’s Military Capabilities

The Directorate of Public Relations, Ministry of Defence has announced in a post on X that a provision of ₹2.19 lakh crores has been made for the overall capital expenditure   of the Indian armed forces. The post reads further: “A key highlight of this budget is the strong focus on the modernisation of all three services,  which shows an increase of nearly 24 percent over the previous financial year. This significant boost will further enhance our military capabilities and strengthen the preparedness of our Defence Forces for the future.”

Sector Wise Allocation

The allocation for MoD (Civil) stands at ₹28,554.61 crores, Defence Services (Revenue) has been allocated ₹3,65,478.98 crores, Capital Outlay on Defence Services received ₹2,19,306.47 crores, and Defence Pensions gets ₹1,71,338.22 crores. This brings the total allocation to ₹7,84,678.28 crores. The capital outlay includes allocation of ₹63,733 crores for aircraft and aero engines, along with ₹25,023 crores for the naval fleet.

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While presenting the budget, FM Sitharaman proposed to exempt basic customs duty on components and parts needed for manufacturing civilian, training and other aircrafts. Further speaking, FM Sitharaman also mentioned waiving off basic customs duty on the import of raw materials used for manufacturing and repairing defence units. This highlights the growth proposed in Indian defence companies production, encouraging the development of India’s Defence industrial sector, and boosting India’s aerospace industries.

Overall, the Union Budget 2026 places India’s defence preparedness and self-reliance at the centre of its fiscal priorities. The emphasis on modernisation, indigenisation, and duty exemptions for defence and aerospace manufacturing signals a sustained effort to strengthen indigenous production capacity, reduce import dependence, and build a resilient, technologically advanced defence industrial ecosystem for the future.

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