Union Budget 2026 boosts India’s defence spending to Rs 7.8 lakh crore, a 15 per cent jump year-on-year. Capital outlay for military hardware rises 21.8 per cent, with duty waivers on aircraft raw materials to support Aatmanirbhar Bharat
The increased outlay comes against the backdrop of Operation Sindoor and the changing geopolitical landscape. Representational pic
Finance Minister Nirmala Sitharaman, while presenting Union Budget 2026, announced an allocation of Rs 7.8 lakh crore for the country’s defence sector. This is a 15 per cent increase in the allocation from the Rs 6.81 lakh crore allocated for the sector in financial year (FY) 2025-26.
The defence forces have been allocated Rs 2.19 lakh crore for the purchase of military hardware as part of the capital outlay in the Budget, news agency IANS reported. This constitutes a 21.8 per cent increase compared to the Rs 1.80 lakh crore allocated in FY 2025-26.
Check LIVE Budget updates here
The increased outlay comes against the backdrop of Operation Sindoor and the changing geopolitical landscape. The approach is also in line with the government's push for an 'Aatmanirbhar Bharat', or self-reliant India, by encouraging indigenous research and manufacturing.
Custom duty to be waived off on raw materials used for aircrafts: Nirmala Sitharaman
Sitharaman also proposed to waive of basic customs duty on raw materials imported for the manufacture of parts of aircraft to be used in maintenance, repair, or overhaul requirements, which will benefit units in the defence sector.
Commenting on the Union Budget 2026 allocation for the sector, Defence Minister Rajnath Singh said, "This budget, following the historic success of Operation Sindoor, has reinforced our resolve to further strengthen the country's defence system. This budget strengthens the balance between security, development, and self-reliance."
Union Budget 2026: Boost to capex in defence sector
The approach of the budget is a continuation of the broader strategic shift to prioritise spending on force modernisation, air defence systems, and next-generation platforms.
The increase in capex has been driven by higher allocations for fighter jets, warships, missiles, artillery guns and other state-of-the-art defence equipment.
The higher allocation for the purchase of defence equipment is expected to benefit both public-sector defence undertakings and their private-sector suppliers, especially as order books across the sector have expanded sharply.
HAL and Bharat Dynamics to get a major boost
The public sector companies expected to benefit include Hindustan Aeronautics Ltd, which has an order book mainly from the Indian Air Force; Mazagon Dock Shipbuilders, which produces warships for the Indian Navy; and Bharat Electronics Ltd, which produces electronics equipment for the forces.
Apart from large-scale companies, smaller private sector companies such as MIDHANI, BEML, Bharat Dynamics and various startups in the drones sector are also expected to benefit from Union Budget 2026.
(With inputs from IANS)
Subscribe today by clicking the link and stay updated with the latest news!" Click here!
