- By Shubham Bajpai
- Sun, 01 Feb 2026 02:35 PM (IST)
- Source:JND
Delivering on the expectations, the Centre on Sunday allocated an overall budget of Rs 7.8 lakh crore to the Defence Ministry for the fiscal year 2026-27. The allocation has seen a spike of around 15 per cent from last year. In the Union Budget 2025, the overall defence budget was Rs 6.81 crore.
The amount is significant as it is 11 per cent of India's GDP. The capital outlay to modernise the defence force has also skyrocketed by 21 per cent to 2.19 lakh crore against Rs 1.80 lakh crore in the last budget.
The bulky budget comes at a time when the Defence Ministry has major projects in the pipeline, such as contracts for Rafale fighter jets, submarines, and unmanned aerial vehicles.
Meanwhile, the Defence budget (civil) has been reduced by 0.45 per cent as compared to last year. In the 2025 budget, it was Rs 28,554.61 crore.
The Defence Services (Revenue) and Capital Outlay were allocated Rs 3,65,478.98 crore, reflecting a jump of 17.24 per cent.
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The Defence Pensions allocation has also seen a rise, with the Centre allotting over Rs 1.71 lakh crore.
Defence manufacturing, maintenance in focus
In a boost to defence manufacturing in India, Union Finance Minister Nirmala Sitharaman announced, "It is proposed to exempt basic customs duty on raw materials imported for the manufacture of parts of aircraft to be used in maintenance, repair or overhaul requirements by units in the defence sector."
In line with the government's aim to promote exports and lift the seafood industry hit by US tariffs, FM Sitharaman propose to increase the limit for duty-free imports of specified inputs used for processing seafood for export from the current one per cent to three per cent of the FOB value of the previous year's export turnover.
Union FM Nirmala Sitharaman said, "I propose to increase the limit for duty-free imports of specified inputs used for processing sea foods for export from the current one per cent to three per cent of the FOB value of the previous year's export turnover. I also propose to allow duty-free imports of specified inputs, which is currently available for exports of leather or synthetic footwear to exports of shoe uppers as well."
The Finance Minister also proposed a basic customs duty exemption to capital goods used for manufacturing lithium-ion cells for batteries and critical minerals.
The rise in spending reflects India's approach to ramp up preparedness against adversaries, especially after last year's escalation with Pakistan during Operation Sindoor. The defence modernising spending is also crucial, given the Chinese aggression threat in the north and northeast.
(With ANI Inputs)