India has sent a strong signal on national security in the Union Budget 2026-27 by significantly raising defence expenditure. Finance Minister Nirmala Sitharaman allocated ₹7.85 lakh crore to the Ministry of Defence, representing a year-on-year increase of about 15 per cent and taking defence spending close to the key 2 per cent of GDP benchmark.
The enhanced allocation comes at a time when India faces complex security challenges along its borders and increasing instability in the global geopolitical environment. Defence remains the largest component of government spending, underlining its priority in the national policy agenda.
A substantial share of the budget has been directed towards modernisation of the armed forces. Capital expenditure has seen a strong jump, with over ₹2.19 lakh crore set aside for new equipment and platforms. These funds will support acquisitions such as fighter jets, warships, artillery, drones and advanced surveillance systems.
The budget also strengthens the push for self-reliance in defence manufacturing. About 75 per cent of modernisation funds will be spent on purchases from Indian companies, creating opportunities for domestic defence firms and startups. The move aligns with the government’s goal of building a robust defence industrial base and expanding exports.
Investment in research and development has been reinforced with a higher allocation for DRDO, supporting innovation in areas such as missiles, electronic warfare, space-based systems and artificial intelligence for defence applications.
Alongside equipment upgrades, the budget provides for revenue expenditure, covering personnel costs, pensions, logistics and maintenance, ensuring that operational readiness is not compromised.
Experts say the higher defence spending reflects a strategic effort to modernise forces, reduce import dependence and prepare for future security challenges, while supporting India’s ambition to emerge as a major global defence manufacturing hub.
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