Union Defence Budget 2026-27: Touches All-Time High of ₹7.85 Lakh Crore (95 billion)
The Ministry of Defence has been allocated an all-time high budget of ₹7.85 lakh crore in the Union Budget 2026-27, marking a 15.19% increase over the Budgetary Estimates (BE) of FY 2025-26. This historic allocation reinforces the Government of India’s firm commitment towards strengthening national security, accelerating military modernisation, and advancing the vision of Aatmanirbhar Bharat.
The total defence outlay accounts for 14.67% of the Central Government’s total expenditure, making it the highest allocation among all ministries, and stands at around 2% of the estimated GDP for FY 2026-27.
Defence Budget Boost After Operation Sindoor
Coming in the backdrop of the successful Operation Sindoor, the enhanced defence allocation caters not only to routine operational and sustenance requirements of the Armed Forces but also to emergency procurement of arms and ammunition undertaken post-operation.
The significant budgetary rise ensures financial preparedness across both Capital and Revenue heads, addressing immediate operational needs while laying the foundation for long-term capability enhancement.
Capital Expenditure Sees a Strategic Leap
A major highlight of the Union Budget 2026-27 is the sharp increase in capital expenditure:
- ₹2.19 lakh crore allocated under Capital Head, up from ₹1.80 lakh crore in FY 2025-26
- 24% jump in Capital Acquisition budget, reaching approximately ₹1.85 lakh crore
This quantum leap underscores the Government’s resolve to transform the Armed Forces with next-generation platforms and weapon systems aligned with global standards.
Planned Capital Acquisitions Include:
- Advanced fighter aircraft
- Smart and precision-guided weapon systems
- Warships and submarines
- Unmanned Aerial Vehicles (UAVs) and drones
- Specialist military vehicles and high-end surveillance equipment
During FY 2025-26 (till December 2025), the Ministry concluded defence contracts worth ₹2.10 lakh crore and accorded Acceptance of Necessity (AoN) approvals exceeding ₹3.50 lakh crore, indicating strong momentum in defence procurement.
Aatmanirbhar Bharat: Strong Push to Domestic Defence Industry
In line with the Government’s indigenisation drive, the defence budget continues to prioritise domestic manufacturing:
- ₹1.39 lakh crore earmarked for domestic industries
- 75% of Capital Acquisition budget reserved for procurement from Indian vendors, including private players
This policy reassures domestic manufacturers, promotes import substitution, and strengthens India’s defence industrial ecosystem. The increased domestic procurement is expected to generate employment, stimulate ancillary industries, and deliver long-term economic benefits.
Sustained Focus on Operational Readiness
For FY 2026-27, the defence budget provides ₹3.65 lakh crore under revenue heads, reflecting a 17.24% increase over FY 2025-26 BE.
Break-up includes:
- ₹1.58 lakh crore for operations and sustenance
- Remaining allocation towards pay and allowances
This enhanced provision ensures timely procurement of spares, ammunition, and operational stores, while supporting maintenance and day-to-day requirements of critical military platforms.
Border Area Development Gets Additional Thrust
The Government has reaffirmed its focus on strategic infrastructure development in border regions through increased funding for the Border Roads Organisation (BRO).
- ₹7,394 crore allocated under Capital Head for FY 2026-27
- Up from ₹7,146.50 crore in FY 2025-26
The allocation will support construction of tunnels, bridges, airfields, and strategic roads, enhancing last-mile connectivity, boosting tourism, and strengthening national security.
Enhanced Healthcare Support for Veterans
Demonstrating strong commitment towards veterans’ welfare, the Government has significantly enhanced funding for the Ex-Servicemen Contributory Health Scheme (ECHS):
- ₹12,100 crore allocated in FY 2026-27
- 45.49% increase over BE of FY 2025-26
- Over 300% increase in ECHS allocation over the last five years
The allocation will fully support Medical Treatment Related Expenditure (MTRE) for ex-servicemen and their dependents.
Increased Investment in Defence R&D
The allocation for the Defence Research and Development Organisation (DRDO) has been raised to ₹29,100.25 crore in FY 2026-27, up from ₹26,816.82 crore in FY 2025-26.
- ₹17,250.25 crore allocated for capital expenditure
This enhanced funding will strengthen indigenous R&D, accelerate development of advanced defence technologies, and reduce dependency on foreign systems.
Defence Pension Allocation Increased
The Union Budget 2026-27 allocates ₹1,71,338.22 crore towards defence pensions, reflecting a 6.56% increase over FY 2025-26 BE.
The allocation will support pension disbursement to over 34 lakh defence pensioners through SPARSH and other authorised agencies.
Raksha Mantri’s Remarks on Union Budget 2026-27
Through a post on X, Rajnath Singh, Raksha Mantri, expressed gratitude to Narendra Modi for his visionary leadership, stating that the Union Budget 2026-27 strengthens the balance between security, development, and self-reliance.
He congratulated Finance Minister Smt. Nirmala Sitharaman for presenting a budget that transforms “aspiration into achievement” and “potential into performance,” calling it a Yuva Shakti–driven Budget that accelerates India’s journey towards a Viksit Bharat.
The Raksha Mantri emphasised that the enhanced defence allocation, coming after the success of Operation Sindoor, further reinforces the Government’s determination to bolster national security and enhance India’s military capabilities, while also serving as a strong testimony to its commitment towards ex-servicemen welfare.
