By Salonee Kulkarni
₹7.85 lakh crore has been allocated for the defence sector in the Union budget. This is higher than the allocation allocation which was ₹6.81 lakh crore. The allocation strengthens India’s aspirations towards military readiness, modernization and personnel welfare.
In the financial year 2027, the Ministry of Defence from the allocated budget will cover defence services (revenue), capital outlay, defence pensions, and civil establishments. In the budget, the allocation to the sector is the largest, highlighting the importance of government expenditure in this sector. The expenditure will include salaries, allowances, maintenance, and operational preparedness. Furthermore, the allocation for this is around ₹3.12 lakh crore.
The expenditure on defence has increased by 40% compared to the last six budgets. The annual average growth was around 9.2% over a period of five years. The defence cap has risen to ₹1.92 lakh crore in FY26.
India is also indigenizing this sector, which shapes the country’s domestic defence production. By 2029, the government aims to invest in defence manufacturing by allocating an investment of ₹3 lakh crore and exports to ₹50,000 crore.