Defence Budget 2025-26: Record Rs 6.81 lakh cr allocations for modernisation, self-reliance
New Delhi: The Union Budget for 2025-26, presented by Finance Minister Nirmala Sitharaman on Saturday, has set a new benchmark by allocating a record Rs 6.81 lakh crore to the Ministry of Defence. This significant increase of 9.53 per cent over the previous financial year underscores the Government’s emphasis on strengthening national security, advancing military modernisation, and fostering the centre’s aim of self-reliance in the defence sector. Out of the total defence Budget, Rs 1.80 lakh crore—representing 26.43 per cent of the allocation—will be dedicated to capital outlay for defence services. This allocation underscores the Government’s focus on modernising the armed forces with advanced technologies and state-of-the-art equipment. Capital expenditure for infrastructure development and research and development (R&D) projects will also be prioritised. Modernisation remains a key agenda, with Rs 1.48 lakh crore earmarked for capital acquisitions by the armed forces. This allocation will fund crucial procurements such as long-endurance remotely piloted aircraft, deck-based aircraft, next-generation submarines, ships, and other advanced platforms. Additionally, Rs 31,277 crore will support capital expenditure on R&D and infrastructural projects across the country. Defence Minister Rajnath Singh hailed the Budget as a significant step toward fulfilling Prime Minister Narendra Modi’s vision.
He highlighted the Budget’s emphasis on fostering development across various sectors, including defence, while addressing the needs of youth, farmers, women, and the middle class. The Government’s focus on strengthening indigenous defence manufacturing and achieving self-reliance remains a top priority. Since 2020-21, a substantial share of the modernisation Budget has been dedicated to domestic procurement. For the 2025-26 fiscal year, Rs 1.12 lakh crore—representing 75 per cent of the modernisation Budget—has been allocated for capital acquisitions from domestic sources. Of this, Rs 27,886 crore has been specifically earmarked for purchases from private Indian industries, fostering innovation and technological advancements in the defence sector.
R&D activities will receive a substantial boost, with Rs 26,816 crore allocated to the Defence Research and Development Organisation (DRDO), reflecting a 12.41 per cent increase from the previous year. A large share of this Budget will support capital expenditure and funding for collaborative projects with private sector partners under the flagship Technology Development Fund scheme. This move is expected to enhance deep technology development in the defence sector. Besides, efforts to strengthen the start-up ecosystem and promote innovation in defence technology will continue under the Innovations for Defence Excellence (iDEX) scheme. An allocation of Rs 449.62 crore, including provisions for the Acing Development of Innovative Technologies with iDEX (ADITI) initiative, underscores the Government’s commitment to technological advancements and private sector engagement.
The Indian Coast Guard (ICG) will also see a significant boost, with Rs 9,676 crore allocated under capital and revenue heads—a 26.50 per cent increase from the previous year. The capital budget for the ICG has surged by 43 per cent to Rs 5,000 crore, facilitating the acquisition of advanced light helicopters, Dornier aircraft, fast patrol vessels, training ships, and interceptor boats. This investment aligns with the Government’s objective to enhance coastal security and rapid response capabilities. Recognising the strategic importance of robust border infrastructure, the Border Roads Organisation (BRO) has been allocated Rs 7,146 crore under the capital head, a 9.74 per cent increase from the previous fiscal year. These funds will support the construction of critical roads, tunnels, and bridges in border areas such as Arunachal Pradesh, Jammu and Kashmir, and Rajasthan, thereby strengthening national security and fostering socio-economic development. Beyond, on priority, to support the welfare of ex-servicemen and their families, the Ex-Servicemen Contributory Health Scheme (ECHS) has been allocated Rs 8,317 crore, marking a 19.38 per cent increase from the previous fiscal year. Additionally, Rs 1.61 lakh crore has been earmarked for defence pensions, representing a 13.87 per cent rise. This allocation will address the implementation of the third revision of One Rank One Pension (OROP) and provide financial stability to approximately 34 lakh defence pensioners.
Meanwhile, officials said that the budgetary provisions underscore the Government’s recognition of the evolving geopolitical landscape and the changing paradigm of modern warfare. With a focus on advanced technology, enhanced operational preparedness, and infrastructure development, the 2025-26 defence Budget aims to transform India’s armed forces into a technologically advanced, combat-ready force capable of addressing emerging challenges. Overall, the increased allocation and strategic initiatives outlined in the Budget are poised to significantly enhance India’s defence capabilities, bolster self-reliance, and contribute to economic growth by fostering innovation, job creation, and technological advancement in the defence sector.
