Defence Budget 2026: Modi Government Announces ₹7.84 Lakh Crore Allocation for Military Modernisation
The Prime Minister Narendra Modi-led Union government has announced a substantial increase in defence spending for the upcoming fiscal year, setting aside ₹7,84,678 crore as the defence outlay for 2026-27. This represents a significant jump from last year's allocation of ₹6,81,210 crore, reflecting the government's continued commitment to strengthening national security and military capabilities.
First Budget After Operation Sindoor
This budget holds particular significance as it marks the first financial plan presented by Finance Minister Nirmala Sitharaman following Operation Sindoor, the precision strikes conducted by Indian defence forces on terror camps in Pakistan and Pakistan-Occupied Jammu and Kashmir (POKJ). These operations were launched in response to the devastating Pahalgam terror attack that occurred in April 2025, highlighting the ongoing security challenges facing the nation.
Detailed Breakdown of Defence Allocation
The comprehensive defence budget for 2026-27 includes several key components:
- Total Capital Outlay: Pegged at ₹2,19,306 crore for modernisation and infrastructure development
- Revenue Expenditure: Set at ₹5,53,668 crore, which includes ₹1,71,338 crore specifically allocated for pensions
- Aircraft and Aero Engines: ₹63,733 crore designated under capital expenditure
- Naval Fleet Enhancement: ₹25,023 crore allocated for strengthening maritime capabilities
Comparative Analysis with Previous Year
The increased allocation represents a substantial growth trajectory in defence spending. In the 2025-26 fiscal year, the government had allocated ₹6,81,210 crore for defence, with the capital outlay initially pegged at ₹1,80,000 crore. This figure later increased to ₹1,86,454 crore at the revised estimate stage, demonstrating the government's responsive approach to defence requirements.
Strategic Initiatives for Aerospace Industry
In her budget speech presented in the Lok Sabha, Finance Minister Nirmala Sitharaman announced several strategic measures to boost the defence aerospace sector:
- Exemption of basic customs duty on components and parts required for manufacturing civilian, training, and other aircraft
- Waiver of basic customs duty on raw materials imported for manufacturing aircraft parts used in maintenance, repair, or overhaul requirements by defence sector units
These decisions are expected to significantly benefit the defence aerospace industry by reducing manufacturing costs and enhancing operational efficiency.
Vision for Viksit Bharat
Presenting the Budget for 2026-27, Finance Minister Sitharaman emphasized that "India will continue to take steps towards becoming a Viksit Bharat". The increased defence allocation signals a continued focus on:
- Military readiness and preparedness
- Modernisation of defence equipment and technology
- Personnel welfare and support systems
- Strategic autonomy in defence manufacturing
The enhanced budget allocation reflects the government's comprehensive approach to national security, combining immediate operational needs with long-term strategic goals for India's defence capabilities.
