The Union Budget 2026 to 27 has given the highest priority to India’s defence sector. The government has focused on military modernisation, self reliance under Aatmanirbhar Bharat, research and development, and welfare of veterans. Below is a clear and simple breakdown of all major allocations and key facts.
Total Defence Budget Allocation
- Total allocation to the Ministry of Defence: Rs 7.85 lakh crore
- Increase of 15.19% compared to FY 2025 to 26 Budget Estimates
- Accounts for 14.67% of total Central Government expenditure
- Highest allocation among all ministries
- Defence budget increased from Rs 2.53 lakh crore in 2013 to 14 to Rs 7.85 lakh crore in 2026 to 27
- Overall rise of about Rs 5.32 lakh crore in 13 years
How Defence Money Will Be Spent
- Capital expenditure: 27.95%
- Revenue expenditure for operations: 20.17%
- Pay and allowances: 26.40%
- Defence pensions: 21.84%
- Civil organisations: 3.64%
Modernisation of Armed Forces
- Capital outlay for Defence Forces: Over Rs 2.19 lakh crore
- Increase of 21.84% over last year
- Capital acquisition fund: Rs 1.85 lakh crore which is about 24% higher than FY 2025 to 26
- Procurement of next generation fighter aircraft, advanced weapons, warships, submarines, UAVs and drones
- Border Roads Organisation allocation: Rs 7,394 crore
- Funds for tunnels, bridges, and strategic airfields
- Rs 975 crore for optical fibre network for defence services
Boost to Indigenous Defence Manufacturing
- Procurement from domestic defence industries: Rs 1.39 lakh crore
- 75% of capital acquisition budget reserved for Indian industries
- Basic customs duty exemption on raw materials for aircraft parts used in defence MRO
- Push for domestic production, private sector participation and job creation
Defence Research and Development
- Allocation to Defence Research and Development Organisation: Rs 29,100.25 crore
- Previous year allocation: Rs 26,816.82 crore
- Capital expenditure within DRDO budget: Rs 17,250.25 crore
- 25% of defence R and D budget opened for industry, startups and academia
- 15 DRDO Industry Academia Centres of Excellence covering 82 research areas
- Network of about 2,000 industries working with DRDO
- 148 new R and D projects sanctioned from 2022 to 23 to 2024 to 25
- Total R and D spending from 2022 to 23 to 2024 to 25: Rs 68,210.22 crore
Veterans Healthcare and Pension Support
- Allocation to Ex Servicemen Contributory Health Scheme: Rs 12,100 crore
- Increase of 45.49% over last year
- ECHS allocation has grown over 300% in the last five years
- Defence pension allocation: Over Rs 1.71 lakh crore
- Increase of 6.56%
- Supports pensions for more than 34 lakh pensioners
Key Takeaways
- Biggest ever defence budget in India’s history
- Strong focus on military modernisation
- Major push for self reliance in defence production
- Higher investment in research and new technologies
- Improved healthcare and financial support for veterans
