India’s defence spending rises sharply in Budget 2026 as modernisation, indigenous capability, and operational readiness become top strategic priorities. In the Union Budget of 2026, India has substantially increased its defence budget by allocating ₹7.85 lakh crores, which was necessitated due to operations conducted during Operation Sindoor as well as enduring security pressures. The Defence Budget for this fiscal year has emphasised the modernisation of all combat corps across India. The overall capital allocation for the budget will also focus on strengthening weapons platforms. The increase in the defence budget has been highlighted by officials as a strategic imperative.
Rising India’s defence spending supports self-reliance and faster procurement. Overall, the amount of money approved for defence has been increased by over 15% compared to the previous year. Alongside a roughly 20% capital budget increase, the defence budget will also rise across maintenance, pensions, and civil spending. Out of all of the ministers’ budgets, the defence budget will receive the largest share of the total ministerial budgets.
In addition to increasing the overall funding for defence (which is fundamentally based on indigenous defence products), the Union Budget for 2026 has also allocated new funds towards capability enhancement and increased self-reliance.
Modernisation push shapes India’s defence spending priorities
The total of ₹2,19,000 crore for capital expenditure was significantly higher than forecasted. In reference to how much was spent on capital equipment and capital bills, the government has stated that, because of recent operational requirements, its increased expenditure was necessary. Examples included the increased costs associated with emergency purchases resulting from border tension.
“After a historic Operation Sindoor, this budget will continue to allow us to strengthen our commitment to improving the robustness of our country’s defense capabilities,” according to the Air Force regarding large procurements of both airframes and engines/jet engines for LCAs (Light Combat Aircraft). In addition, major increases in budget allocations for naval sea platforms (including submarines) and drones were made in the budget. More than ₹13.9 billion was included for domestic procurement this year.
Capex growth and industry response
Capital expenditure rose to approximately ₹2.31L crore. Currently, 30% of expenditures are in the form of capital investments. Defence production has recently reached approximately ₹1.51L crore. Exports have surpassed ₹23,000 crore with consistent annual growth. The target of the government’s production for the defence sector is ₹3L crore.
“The increase in the defence budget indicates a continued emphasis on modernisation and capability improvement, and an increased focus on independent supply chains within the defence industry of India.” Industry reacted to the new customs duty exemption for parts by applauding the initiative. Government officials expect much faster procurement of products, which will support the development of greater supply chain capacity both domestically and abroad.
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