India Boosts Defence Spending to Record ₹7.85 Lakh Crore for FY 2026-27

Record Defence Allocation Announced

India's Ministry of Defence (MoD) has been allocated a record ₹7.85 lakh crore (approximately $86.7 billion) for the financial year 2026-27, as part of the Union Budget announced on February 1, 2026. This substantial increase represents a 15.19% rise over the Budget Estimates (BE) of FY 2025-26. The defence budget now constitutes 14.67% of the total national budget, making it the largest share among all ministries, and stands at 2% of the estimated Gross Domestic Product (GDP) for the upcoming fiscal year.

Focus on Modernization and Indigenous Production

A significant portion of the increased allocation is directed towards enhancing India's military capabilities and fostering self-reliance in defence manufacturing. Over ₹2.19 lakh crore has been earmarked for capital expenditure for the armed forces in 2026-27, reflecting a 21.84% increase compared to the previous year's budget estimate. Of this, ₹1.85 lakh crore is specifically designated for capital acquisitions, a rise of approximately 24%.

These funds are intended for the procurement of advanced platforms and technologies, including:

• Next-generation fighter aircraft
• Advanced weaponry
• Ships and submarines
• Uncrewed Aerial Vehicles (UAVs) and drones

The objective is to modernize all three services – Army, Navy, and Air Force – and strengthen future capabilities. Furthermore, a major thrust has been placed on indigenisation, with ₹1.39 lakh crore, or 75% of the capital acquisition budget, allocated for procurement from domestic industries to boost self-reliance under the 'Aatmanirbhar Bharat' initiative.

Strategic Context and Official Statements

The increased defence outlay comes in the aftermath of 'Operation Sindoor', a recent military engagement that has underscored the importance of robust national security. Defence Minister Rajnath Singh expressed gratitude to Prime Minister Narendra Modi for the allocation, stating that the budget 'strengthens the security-development-self-reliance balance' and is 'in the best interest of the nation'. Prime Minister Modi framed the budget as a roadmap towards achieving self-reliance and positioning India as a top-three global economy. The defence budget has nearly tripled since 2013-14, when it stood at ₹2.53 lakh crore.

Budgetary Breakdown

The total allocation to the Ministry of Defence is distributed across various critical areas:

• Capital Expenditure: 27.95% (for capability development and modernization)
• Revenue Expenditure (Sustenance & Operational Preparedness): 20.17%
• Pay and Allowances: 26.40%
• Defence Pensions: 21.84%
• Civil Organizations: 3.64%

Specific allocations also include ₹73.94 billion for the Border Roads Organisation for strategic infrastructure projects and ₹9.75 billion for an optical fibre cable network for defence services. The allocation for the Ex-Servicemen Contributory Health Scheme saw a 45.49% increase to ₹12,100 crore, and the Defence Research and Development Organisation (DRDO) received ₹29,100.25 crore.

Conclusion

The significant increase in India's defence spending for FY 2026-27 underscores the government's commitment to national security, military modernization, and the 'Aatmanirbhar Bharat' vision. With a substantial focus on capital expenditure and indigenous procurement, the budget aims to equip the armed forces with advanced capabilities while bolstering domestic defence manufacturing.