84 lakh crore for the defense sector. This represents a substantial 15% increase compared to the previous financial year. According to official data, the hike of approximately ₹1 lakh crore in the defense budget is the largest annual increase in the last decade. This strategic decision follows the heightened security concerns and geopolitical shifts observed after 'Operation Sindoor' and the conflict with Pakistan in May last year. The government has utilized this budget to emphasize the enhancement of the military's striking power and technological capabilities.
84 lakh crore has been categorized into four primary segments: Capital Expenditure, Revenue Expenditure, Defense Pensions, and Civil Defense. The primary objective is to equip the armed forces with state-of-the-art weaponry while strengthening border infrastructure. Defense Minister Rajnath Singh stated that this budget has been meticulously designed to meet the nation's security requirements post-Operation Sindoor, ensuring that the military's preparedness remains strong in a changing global landscape.
Massive 21.84% Hike in Capital Outlay for Modernization
The most significant highlight of Budget 2026-27 is the sharp increase in Capital Expenditure. 19 lakh crore for the procurement of new weapons, aircraft, warships, and other military assets. 80 lakh crore. Analysts suggest that this surge in capital outlay is a direct response to the need for rapid modernization of the three services. The funds will be primarily utilized for infrastructure development, acquisition of advanced machinery, and the integration of cutting-edge technology into the defense ecosystem. 86 lakh crore, making this year's jump a clear indicator of the government's long-term defense strategy.
Strategic Focus on Air Force and Navy: The Rafale Deal
A significant portion of the defense budget has been earmarked for enhancing the capabilities of the Indian Air Force and the Indian Navy. An allocation of ₹63,733 crore has been made specifically for aircraft and aero-engines. According to reports, the deal for 114 Rafale fighter jets between India and France is nearing finalization. Under this project, French aerospace major Dassault Aviation is expected to provide 18 Rafale jets in fly-away condition, while the remaining will be manufactured in India under the 'Make in India' initiative. At least 60% of the project work is slated to happen within India, boosting the domestic supply chain. On top of that, ₹25,024 crore has been allocated for the naval fleet to facilitate the acquisition of new warships and submarines.
Revenue Expenditure, Pensions, and R&D Investment
24% higher than the previous year. These funds are designated for the daily operations of the military, including the procurement of ammunition, fuel, maintenance, and salaries of personnel, while 53% increase. To bolster self-reliance in the defense sector, ₹17,250 crore has been allocated for Research and Development (R&D). The government aims to foster the development of indigenous weapon systems and modern defense technologies, reducing the long-term dependence on imports and strengthening the 'Atmanirbhar Bharat' vision.
Policy Reforms and Regional Security Analysis
In a move to support the domestic defense industry, the Finance Minister announced the removal of custom duties on imported raw materials used in the manufacturing of aircraft and defense equipment. According to industry experts, this decision will directly benefit the Indian defense and aerospace sectors by lowering production costs and encouraging private investment. In terms of regional security, while India's defense budget remains lower than China's estimated ₹27 lakh crore, it Notably exceeds Pakistan's ₹81,000 crore allocation. Analysts observe that while Pakistan had to cut its total budget by 7% to increase its defense spending, India has managed a 15% hike in defense while growing its overall budget by 8%, reflecting a stable and resilient economy.
To sum it all up, Budget 2026-27 provides a transformative roadmap for India's defense sector. The emphasis on capital expenditure and indigenous research, particularly in the wake of Operation Sindoor, underscores the government's commitment to establishing India as a formidable military power capable of addressing modern-day security challenges.