By Janhvi Ahuja
India’s defence sector is marching towards modernization as the ‘Make in India’ initiative received priority in the Union Budget Allocation process of 2025. For the session of 2025-2026, the Union Finance Minister Nirmala Sitharaman dedicated an annual capital budget allocation of Rupees 6,81,210 crore to enhance the efforts working towards the ‘Make in India’ practice.
This session’s allocation has seen a definitive increase as compared to the last session, that is 2024-2025 when the budget stood at Rupees 1.72 lakh crore. Under this budget presentation, there has been an increase of 4.65% at Rupees 1.80 lakh crore.
Similar to the previous session, during this year a major section of the budget, that is 75% (Rupees 1,35,000) of the capital will be allocated for the procurement of supplies and material from both domestic and private manufacturers.
The complete budget dedicated towards the modernization of this cause is Rupees 2,66,168 crore for the financial year of 2025-2026. This section covers the cost of capital expenditure and outlay, storing facilities, refits, repairs along with works of revenue expenditure.
The Ministry of Defence was allocated Rupees 6,81,210 crore under the 8th budget allotment process. This constitutes around 13.445 of the total budget and takes with it 1.9% of the GDP. if we analyse the breakdown of the capital expenditure, we can see that the expenditure allotted in the fiscal quarter of the year 2026, has separated Rupees 1,021 for land systems, Rupees 3,615 crore for heavy, Rupees 48,614 for aviation, aircrafts and aero engines and medium vehicles and Rupees 14,924 for Research and Development.
Pawan Khatter, a Partner and National Leader of Aerospace and Defence made a statement during his analysis and understanding of the budget which stated that, “A closer examination of capital expenditure shows an increase of 21% and 74% for aircraft and aero engines and joint staff requirements over FY 2024-2025. This reflects a strong signal towards modernization and Indigenous production of light combat aircrafts and helicopters, advanced military equipment, including drones, and next-gen weaponry.”