How the ₹7.84 lakh crore defence budget will strengthen India’s military

India has announced a major increase in its defence spending for the financial year 2026–27, setting aside ₹7.84 lakh crore to strengthen the armed forces and improve military preparedness. This marks a rise of about 15 per cent compared to the ₹6.81 lakh crore allocated in the current financial year. The government says the higher budget reflects India’s growing security needs and its focus on modernising the Army, Navy and Air Force.

Defence Minister Rajnath Singh said the new defence budget shows the country’s strong commitment to national security. He described modernisation as the most important feature of this year’s allocation. According to him, nearly ₹1.85 lakh crore has been specifically kept aside for upgrading military capabilities. This amount is around 24 per cent higher than what was provided for modernisation in the previous year.

The government has pointed out that India faces complex security challenges, especially along its borders with China and Pakistan. In this context, the increased defence budget is meant to ensure that the armed forces are better equipped, technologically advanced and ready to respond to any situation. The Defence Ministry also said the allocation will support domestic defence manufacturing and reduce dependence on imports.

Focus on modernisation and capital spending

A major part of the defence budget has been earmarked for capital expenditure, which is used to buy new weapons, aircraft, warships and other advanced equipment. For 2026–27, capital expenditure has been fixed at ₹2,19,306 crore. This is more than ₹39,000 crore higher than the revised estimate of the current financial year.

In comparison, the revised capital expenditure for 2025–26 stands at ₹1,86,454 crore, while the original budget estimate for that year was ₹1.80 lakh crore. The higher allocation this year clearly shows the government’s intention to speed up modernisation across all three services.

Out of the capital budget, ₹63,733 crore has been set aside for aircraft and aero engines. This money will be used to purchase new fighter jets, transport aircraft, helicopters and related systems. Strengthening air power is seen as a key priority, especially given the changing nature of modern warfare.

The Navy has also received special attention. An amount of ₹25,023 crore has been allocated to strengthen the naval fleet. This will support the construction and acquisition of warships, submarines and other maritime assets. As India’s strategic interests in the Indian Ocean region grow, a strong navy is considered essential for protecting sea routes and national interests.

The Defence Minister said the modernisation push will help the armed forces adopt new technologies, improve surveillance and enhance combat readiness. He also stressed that a large part of the modernisation budget will be spent within the country, giving a boost to the “Make in India” initiative in defence.

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Pensions, welfare and support to industry

Apart from capital spending, a large share of the defence budget goes towards revenue expenditure. For 2026–27, revenue expenditure has been fixed at ₹5,53,668 crore. This includes salaries, operational costs, maintenance and pensions.

Pensions alone account for ₹1,71,338 crore. This shows the government’s continued focus on the welfare of serving personnel and veterans. With a large number of retired defence personnel, pension payments form a significant part of the defence budget every year.

Special attention has also been given to the welfare of ex-servicemen. The allocation for the Ex-Servicemen Contributory Health Scheme has been increased to ₹12,100 crore. This is around 45 per cent higher than the current year’s allocation. The scheme provides healthcare services to retired defence personnel and their families, and the increased funding is expected to improve access and quality of medical care.

In her budget speech, Finance Minister Nirmala Sitharaman announced several measures to support the defence and aerospace industry. One key decision is the exemption of basic customs duty on components and parts used in the manufacture of civilian, training and other aircraft. This move is aimed at reducing costs for domestic manufacturers and encouraging local production.

The government has also decided to waive customs duty on raw materials imported for maintenance, repair and overhaul work in the defence sector. This is expected to strengthen India’s capabilities in aircraft maintenance and repair, creating jobs and reducing dependence on foreign service providers.

According to the government, these steps will help build a strong defence industrial base in India. They are also expected to attract investment, promote innovation and support small and medium enterprises working in the defence and aerospace sectors.

Overall, the defence budget for 2026–27 is close to two per cent of India’s projected gross domestic product. While some experts have called for even higher spending, the government believes the current allocation strikes a balance between security needs and fiscal responsibility.

The Defence Ministry said the increased budget will help improve military preparedness, encourage the use of advanced technology and ensure more efficient use of resources. It also stressed the importance of faster and more transparent procurement processes so that the armed forces get the equipment they need on time.

In simple terms, the ₹7.84 lakh crore defence budget is designed to do three main things: modernise the armed forces, take care of soldiers and veterans, and support India’s growing defence industry. Through higher spending on aircraft, warships, weapons and pensions, the government aims to build a stronger and more self-reliant defence system for the years ahead.