Union Budget 2026: After India’s Operation Sindoor and various defence developments, the country’s defence sector took centre stage in the Union Budget 2026. Presented on Sunday, February 1, in Parliament by Finance Minister Nirmala Sitharaman, the Budget allocated a record Rs 7.85 lakh crore to defence, marking a nearly 15% increase over the previous year (Rs 6.81 lakh crore).
Defence gets massive boost
In this budget, a significant focus has been placed on capital expenditure, with Rs 2.19 lakh crore dedicated for weapons procurement and modernisation of the Army, Navy, and Air Force, reflecting the government’s emphasis on strengthening military preparedness. The nearly 15% increase highlights the Modi government’s focus on enhancing military readiness and modernisation, especially amid growing threats from Pakistan and China. However, FM Sitharaman did not introduce any defence-specific policy measures in her Budget speech this year.
The enhanced capital outlay in Budget 2026 underscores the government’s focus on acquiring advanced weapon systems and strengthening domestic defence manufacturing. Last month, India cleared Rs 3.25 lakh crore deal to procure 114 Rafale jets from France, one of the country’s largest fighter aircraft deals.
What does the hike mean?
Over the past decade, India’s defence budget has steadily increased from Rs 2.94 lakh crore in 2015-16 to Rs 7.85 lakh crore in 2025-26, even as defence expenditure as a share of GDP has remained stagnant or declined. This year’s allocation reflects a continued emphasis on “Make in India” and self-reliance in defence production. The urgency of modernisation was highlighted after Operation Sindoor, which underscored the operational capabilities of the armed forces and the importance of indigenous systems like the Akash air defence system and Nagastra loitering munition.
Apart from this, Sitharaman also announced exemption of basic customs duty on components and parts required for the manufacture of civilian, training and other aircrafts. The basic custom duty on raw materials imported for manufacture of parts of aircraft to be used in maintenance, repair, or overhaul requirements by Units in the Defence sector will also be exempted.
