The Centre has sent a clear and strategic signal on national security in the Union Budget 2026–27, announcing a 15 per cent increase in defence spending to ₹7.8 lakh crore. Presented as the first full budget after Operation Sindoor, the allocation underscores the government’s focus on military modernisation, indigenous defence production and building future-ready combat capabilities.
In her budget speech, Finance Minister Nirmala Sitharaman said the objective was to make India’s defence preparedness more technology-driven and equip the armed forces with modern platforms and systems. Reflecting this priority, defence capital expenditure has seen the sharpest rise, up 21.84 per cent, with an allocation of ₹2.19 lakh crore.
Certified Cyber Crime Investigator Course Launched by Centre for Police Technology
Direct thrust on modernisation
According to the defence establishment, a substantial portion of the budget will be directed towards key modernisation projects, including Rafale fighter aircraft, submarines, unmanned aerial vehicles (UAVs) and other advanced platforms. The allocation is also aimed at addressing operational gaps identified during Operation Sindoor, with enhanced focus on logistics, surveillance and air defence capabilities.
Customs duty relief for aircraft manufacturing
The budget has extended significant relief to the aviation and defence manufacturing ecosystem. The government has proposed exemption from basic customs duty on components used in the manufacture of civil, training and other aircraft.
In addition, raw materials imported for maintenance, repair and overhaul (MRO) of aircraft will also attract customs duty exemptions. The move is expected to reduce costs, strengthen domestic manufacturing and boost India’s defence industrial base.
Break-up of revenue, civil and pension heads
Budget documents show a broad-based increase across key defence segments:
- Defence Services (Revenue) allocation has risen to ₹3,65,478.98 crore, marking a 17.24 per cent increase.
- Ministry of Defence (Civil) allocation has marginally declined to ₹28,554.61 crore, reflecting a 0.45 per cent reduction.
- Defence pensions have been allocated ₹1,71,338.22 crore, up 6.53 per cent from the previous year.
Comparison with previous years
In FY 2024–25, the defence sector had received an allocation of ₹6,21,940 crore. The latest increase indicates the government’s intent to maintain momentum in military modernisation. Official data also highlights that in 2024, India recorded ₹1.26 lakh crore in indigenous defence production and ₹21,083 crore in defence exports, reinforcing the progress of the ‘Make in India’ initiative in the defence sector.
Clear strategic message
Experts believe the emphasis on defence in Budget 2026–27 goes beyond numbers and carries a strong strategic message. In the aftermath of Operation Sindoor, the government has made it clear that future security challenges will be met through advanced technology, self-reliance in defence production and accelerated modernisation.
Overall, the budget positions India’s defence policy firmly on a long-term strategic footing, seeking to strengthen military capability while simultaneously developing the defence industry as a key pillar of the national economy.
About the author – Rehan Khan is a law student and legal journalist with a keen interest in cybercrime, digital fraud, and emerging technology laws. He writes on the intersection of law, cybersecurity, and online safety, focusing on developments that impact individuals and institutions in India.
