In the 2025–26 Union Budget, the Indian government has set aside ₹6.81 lakh crore for defense, a 9.5% increase over the ₹6.21 lakh crore allotted the year before. India’s emphasis on updating its military and enhancing national security in the face of geopolitical unrest is demonstrated by this allocation.
In the Union Budget 2025–2026, the Indian government allotted a record ₹6.81 lakh crore to the defense industry, a 9.53% increase over the ₹6.21 lakh crore allotted the year before. During her presentation to the Lok Sabha, Finance Minister Nirmala Sitharaman announced this large budget, highlighting the government’s dedication to strengthening India’s security infrastructure and military capabilities. This allocation, which makes up roughly 13.45% of the whole Union Budget and equals about 1.91% of India’s estimated GDP, highlights
A significant capital expenditure of ₹1.80 lakh crore is included in the budget with the goal of modernizing the armed forces by purchasing new warships, aircraft, and weaponry. Furthermore, ₹1.12 lakh crore is set up for domestic procurement, supporting the government’s drive for defense industrial independence through programs like Atmanirbhar Bharat. Funding for several other important areas is also included in the budget, including a 12% boost for defense research and development and a 14% increase for defense pensions.
Significantly, funding for the Indian Coast Guard has increased by an astounding 43%, demonstrating a commitment to strengthening coastal security capabilities. By allocating ₹7,146 crore to the Border Roads Organization, the budget also promotes infrastructure development, which is essential for fortifying India’s border infrastructure.
1.8 lakh crore in capital expenditures for modernization, which include:
For airplanes and aero engines, ₹48,614 crore
₹24,390 crore to upgrade the navy fleet
63,099 crore rupees for additional equipment
₹4.88 lakh crore in revenue expenditures, which include:
Salaries for employees: ₹1.97 lakh crore
Pensions: 1.6 lakh crore (a 14% annual increase)
Indigenous Procurement: domestic defense acquisitions will account for 75% of the capital expenditure (₹1.12 lakh crore).
Defense R&D: DRDO is allotted ₹26,817 crore, a 12.4% increase
With record-breaking domestic defense production (₹1.26 lakh crore in 2024), emphasis should be placed on Made in India.
By FY29, the goal is to increase exports to ₹50,000 crore and triple defense output to ₹3 lakh crore.
The TATA Aircraft Complex and the light tank ‘Zorawar’ induction are examples of new projects.
₹6,500 crore has been set aside for infrastructure and border roads.
Money for long-term deployments along China’s disputed borders
To support retired troops, defense pensions were raised by 13.8%. Additionally, ₹8,317 crore was set aside for the Ex-Servicemen Contributory Health Scheme (ECHS).
Just 27.66% of the defense budget is earmarked for capital expenditures; the remaining portion is used for wages and pensions.
Underutilized funds: The military returned ₹13,000 crore from the capital budget of the previous year.
GDP allocation: Defense spending is still 1.9% of GDP, which is less than the 3% goal that experts recommend.
This budget illustrates India’s struggle with financial limitations and operational inefficiencies while striking a balance between short-term security requirements and long-term aspirations for independence. The defense budget for this year shows a strong commitment to updating India’s military and guaranteeing operational preparedness for changing international security threats.
