Defence budget up by unprecedented 15% at ₹7.84 lakh crore

The total capital expenditure has been pegged at ₹2.19 lakh crore for FY27, while revenue expenditure is ₹5.54 lakh crore, as per the budget document
| Photo Credit:
ADNAN ABIDI

The government’s focus on strengthening the armed forces’ capabilities after Operation Sindoor and amid continuing global geopolitical upheaval is reflected clearly in the Union Budget, with the Ministry of Defence (MoD) receiving an unprecedented 15 per cent hike to ₹7.84 lakh crore for FY27, up from ₹6.81 lakh crore allocated for FY26.

Defence outlay

The total capital expenditure has been pegged at ₹2.19 lakh crore for FY27, while revenue expenditure is ₹5.54 lakh crore, as per the budget documents placed before Parliament by Finance Minister Nirmala Sitharaman.

Overall, defence received top priority with the highest allocation of ₹7.85 lakh crore, accounting for 14.68 per cent of the Union Budget, aimed at strengthening preparedness, driving innovation and reinforcing India’s national security, the Ministry of Defence said.

Funding rationale

“We sought a 20 per cent hike based on improved absorption and strategic challenges to fill key capability gaps and we are delighted that the Finance Ministry has agreed to this unprecedented increase,” Defence Secretary RK Singh told businessline.

Singh said the overall capex outlay has risen by 21 per cent to about ₹2.9 lakh crore. Significantly, he noted that the budget is actually spent on modern equipment and technological upgrades required to enhance the capabilities of the armed forces. The capex allocated as the BE of FY26 was at ₹1.86 lakh crore, he added.

But, the percentage uptick in capital outlay is 17.6 per cent, when the BE for FY27 is compared with RE for FY26, the budget data reveal.

“We will ensure rapid modernisation of our armed forces’ capabilities,” Singh said.

Acquisition Push

The quantum jump in the Budget is a strategic imperative. During FY26, up to the third quarter, that is, till December 2025, the MoD concluded contracts worth ₹2.10 lakh crore and has so far given Acceptance of Necessity (AoN) approvals for over ₹3.50 lakh crore.

The upcoming projects under capital acquisition will equip the armed forces with next-generation fighter aircraft, as the Defence Acquisition Board has cleared the Indian Air Force’s proposal to acquire 114 Rafale fighter aircraft from France and some announcements are expected during French President Emmanuel Macron’s visit to Delhi this month. Six submarines from Germany before the end of this fiscal year, smart and lethal weapons, Unmanned Aerial Vehicles (UAVs), specialist vehicles, among others, too, are due for acquisition.

Published on February 1, 2026