Union Budget 2026: Defence Allocations Up 15% Amid Security Concerns

The Union Budget allocated a 15% higher budget for the defence sector for FY2026–27. Union Finance Minister Nirmala Sitharaman presented the budget for the ninth consecutive time today.

The defence budget was raised to ₹7.85 lakh crore from ₹6.81 lakh crore a year ago. The higher allocation for the defence sector signals that the government is focused on military preparedness amid rising regional threats from both Pakistan and China, reports suggested.

India’s defence allocation for the current financial year ending March 31 stood at 1.9% of GDP, lower than Pakistan’s defence allocation of 2.3% of GDP for the same year. Over the past decade, defence capital expenditure has risen to ₹2.31 lakh crore from ₹83,614 crore in FY16.

Sitharaman did not announce any specific policy pertaining to the defence sector in her budget speech. Over the last five years, India’s defence expenditure has grown by over 40%, with annual growth of around 9.2% since 2020, a report by CNBC said.

Defence capital expenditure rose sharply by 28% to ₹2.31 lakh crore, compared with ₹1.80 lakh crore a year ago. India has been actively enhancing its acquisition of advanced weapon systems and strengthening domestic defence manufacturing.

A key highlight mentioned by Sitharaman during the speech was the government’s decision to exempt basic customs duty on imports of raw materials used for the manufacturing, servicing, repair, or overhaul of defence equipment.

The budget allocation for the Agnipath scheme under the revenue head has been increased from ₹9,414 crore to ₹15,173 crore.

Priority in the defence sector remains on greater self-reliance, modernisation, faster procurement, and reducing import dependence. In the FY27 budget, the modernisation budget alone has been revised upward by 24%.