In the Union Budget 2026-27, the Ministry of Defence was allocated ₹7,84,678 crore for defence in FY27, marking a substantial rise from ₹6,81,210 crore in the previous year. Defence Minister Rajnath Singh welcomed the allocation and said it reinforces the government’s resolve to strengthen India’s defence capabilities after a sharp increase in allocations to the sector.
Singh said the allocations “live up to the sentiments and expectations of the people” and provide a strong foundation for Prime Minister Narendra Modi’s vision of a self-reliant India and a developed nation by 2047.
Defence budget allocation details
While talking to the press, Rajnath Singh explained, “This budget allocates ₹7.85 lakh crore for the defence sector… This budget, following the historic success of Operation Sindoor, has reinforced our resolve to further strengthen the country’s defence system.”
The latest allocation comes months after Operation Sindoor and puts forth the government’s emphasis on defence preparedness and modernisation. Singh said ₹2.19 lakh crore has been provided for the overall capital expenditure of the armed forces, with a clear focus on upgrading the Army, Navy and Air Force.
According to Budget documents, the defence ministry has been allocated a total of about ₹7.8 lakh crore for 2026-27. Of this, capital expenditure has been raised to ₹5.95 lakh crore, up from ₹4.92 lakh crore last year. Overall capital spending has increased by around 22% year-on-year, while funds earmarked specifically for modernisation have risen by about 24%.
The total capital outlay has been pegged at ₹2,19,306 crore, while revenue expenditure stands at ₹5,53,668 crore, including ₹1,71,338 crore for pensions. Within capital expenditure, ₹63,733 crore has been allocated for aircraft and aero engines and ₹25,023 crore for the naval fleet.
Defence budget in 2025-26
In 2025-26, the defence budget stood at ₹6,81,210 crore, with capital outlay initially pegged at ₹1,80,000 crore and later revised to ₹1,86,454 crore.
In her Budget speech, Sitharaman also announced measures aimed at boosting the defence aerospace ecosystem. These include exemptions from basic customs duty on components and parts required for manufacturing civilian, training and other aircraft, as well as on raw materials imported for manufacturing aircraft parts used in MRO activities. The steps are expected to support domestic manufacturing and strengthen the defence aerospace industry.