Finance Minister Nirmala Sitharaman has announced an allocation of Rs 7.8 lakh crore for India’s defence sector in the Union Budget for 2026-27, marking a 15% increase from the previous year’s Rs 6.81 lakh crore. A significant portion of this budget, Rs 2.19 lakh crore, is designated for the purchase of military hardware, reflecting a 21.8% rise from the previous fiscal year.
This increased allocation is attributed to Operation Sindoor and evolving geopolitical dynamics, aligning with the government’s ‘Aatmanirbhar Bharat’ initiative to promote indigenous research and manufacturing. Additionally, the Budget proposes the exemption of basic customs duty on raw materials imported for aircraft part manufacturing, benefiting defense sector units.
Defence Minister Rajnath Singh praised the Budget, emphasizing its reinforcement of the country’s defense system post Operation Sindoor. The strategic focus of the Budget emphasizes force modernization, air defense systems, and next-gen platforms, continuing the trend of prioritizing spending in these areas.
The enhanced capital expenditure is driven by augmented allocations for fighter jets, warships, missiles, artillery guns, and advanced defense equipment. This boost in defense equipment procurement is expected to support both public sector undertakings like Hindustan Aeronautics Ltd, Mazagon Dock Shipbuilders, and Bharat Electronics Ltd, as well as private sector suppliers benefiting from the sector’s expanded order books.
