Budget 2026-27: Post Operation Sindoor, defence gets record Rs 7.8 lakh crore

Guwahati, Feb 1: In a push towards strategic self-reliance in defence and military, Finance Minister Nirmala Sitharaman, on Sunday, announced a record allocation of Rs 7.8 lakh crore for the defence sector in the Union Budget for 2026–27.

The allocation marks a 15% increase over the Rs 6.81 lakh crore provided in the previous financial year, underscoring the government’s priority on national security amid evolving geopolitical challenges.

A significant highlight of the Budget is the sharp rise in capital expenditure for defence procurement.

The Armed forces have been allocated Rs 2.19 lakh crore for the purchase of military hardware, a 21.8% jump from the Rs 1.80 lakh crore earmarked in FY 2025–26.

This enhanced capital outlay is aimed at accelerating force modernisation, strengthening air defence systems and inducting next-generation platforms across the Army, Navy and Air Force.

The increased spending comes in the backdrop of Operation Sindoor and a rapidly changing global security environment.

The Budget also aligns closely with the government’s flagship vision of Aatmanirbhar Bharat, with a renewed emphasis on indigenous research, design and manufacturing of defence equipment.

As part of measures to support domestic defence manufacturing, Sitharaman proposed waiving basic customs duty on raw materials imported for manufacturing aircraft parts meant for maintenance, repair and overhaul (MRO) activities.

This move is expected to lower costs and enhance competitiveness for Indian defence and aerospace units.

Reacting to the Budget, Defence Minister Rajnath Singh said the enhanced allocation reinforces India’s long-term strategic goals.

“This budget, following the historic success of Operation Sindoor, has reinforced our resolve to further strengthen the country’s defence system. It strikes a strong balance between security, development and self-reliance,” he noted.

Among public sector firms, Hindustan Aeronautics Ltd, with a strong order book from the Indian Air Force, Mazagon Dock Shipbuilders, a key supplier of warships to the Navy, and Bharat Electronics Ltd are expected to be major beneficiaries.

Smaller private sector players such as MIDHANI, BEML and Bharat Dynamics Ltd, along with several drone technology startups, are also likely to gain from the push for indigenous procurement.

Welcoming the Budget, DRDO Joint Director Binoy Kumar Das said financial support has never been a constraint for India’s premier defence research organisation.

Speaking to the press on Budget day after receiving the JIS Maha Samman award at the Science City auditorium, he said the Union government has consistently extended unconditional support to the Defence Research and Development Organisation.

“Budget has never been a constraint for us. We have been asked to work on next-generation technologies that no one else in the world currently possesses,” Das said, emphasising that India cannot afford to depend on imports amid rapidly changing war scenarios and geopolitical dynamics.

Das also stressed that the enhanced Budget support would help India not only meet its domestic defence needs but also emerge as a global exporter of advanced defence systems.

“We are at a technology inflection point. What we develop will empower our systems and help make India an economic superpower through exports,” he said.

With inputs from agencies