Union Budget: How much Centre Allocates for Defense?

The Union Budget for FY2025-26 has allocated ₹6.8 lakh crore for India’s defence sector, marking a significant increase from previous years. This budget prioritizes military modernization, domestic procurement, and operational readiness. The defence outlay includes ₹1.8 lakh crore for acquiring new weapons, systems, and equipment, with a strong emphasis on indigenous manufacturing to achieve self-reliance in defence. Despite the substantial allocation, Finance Minister Nirmala Sitharaman did not explicitly mention the defence budget in her speech. However, budget documents reveal a comprehensive breakdown of funds aimed at strengthening India’s military capabilities.

Breakdown of the Defense Budget

1. Total Defense Allocation

  • The government has allocated ₹6.8 lakh crore for defence spending in FY2025-26.
  • This reflects a 9% increase from the budget estimates of FY2024-25 (₹6.22 lakh crore).
  • It is 6% higher than the revised estimates of FY2024-25 (₹6.41 lakh crore).

2. Military Modernization and Capital Expenditure

  • ₹1.8 lakh crore is dedicated to the modernization of the armed forces.
  • This includes procurement of,
  • Fighter jets and helicopters.
  • Warships and submarines.
  • Tanks and artillery guns.
  • Drones, rockets, and missile systems.
  • A significant chunk of the capital outlay is directed toward indigenous procurement, in line with India’s “Aatmanirbhar Bharat” (self-reliant India) initiative.

3. Revenue Expenditure

  • ₹3.11 lakh crore is allocated for revenue expenditure, which covers:
  • Salaries of defence personnel.
  • Maintenance and operational costs.
  • Infrastructure and logistics for the armed forces.

4. Defense Pensions

  • The pension outlay stands at ₹1.6 lakh crore, ensuring financial support for retired defence personnel.

5. Defense Budget as a Share of GDP

  • The total defence outlay accounts for 1.9% of India’s projected GDP for FY2024-25.

Key Focus Areas of the Budget

1. Boosting Self-Reliance in Defense Manufacturing

  • The government continues to emphasize indigenous production of military hardware.
  • A large portion of the defence budget is allocated for procuring weapons and equipment from Indian defence manufacturers.
  • Initiatives such as Make in India, Defence Production and Export Promotion Policy (DPEPP), and the Defence Acquisition Procedure (DAP) promote self-sufficiency.
  • The Defence Ministry aims to reduce dependency on foreign imports and encourage domestic innovation.

2. Strengthening the Armed Forces

  • The budget focuses on modernizing the Indian Army, Navy, and Air Force.
  • Procurement of advanced fighter jets, warships, and missile systems will enhance India’s defensive and offensive capabilities.
  • Investments in cybersecurity, space defence, and artificial intelligence (AI) in warfare are expected to increase.

3. Infrastructure Development

  • The budget includes provisions for the development of strategic roads, airbases, and military installations along India’s borders.
  • Projects like the Border Roads Organisation (BRO) initiatives will improve connectivity in sensitive areas, particularly along the India-China and India-Pakistan borders.

4. Research & Development (R&D) in Defense

  • Increased funding for the Defence Research and Development Organisation (DRDO) to support innovation in military technology.
  • Collaboration with private players and startups in defence R&D is being encouraged.
  • Comparative Analysis with Previous Years
Category  FY2024-25 (BE) FY2024-25 (RE) FY2025-26 (BE) Growth (%)
Total Defense Budget ₹6.22 lakh cr ₹6.41 lakh cr ₹6.8 lakh cr +9%
Modernization & Procurement ₹1.62 lakh cr ₹1.75 lakh cr ₹1.8 lakh cr +8.8%
Revenue Expenditure ₹2.97 lakh cr ₹3.05 lakh cr ₹3.11 lakh cr +4.9%
Pension Outlay ₹1.38 lakh cr ₹1.52 lakh cr ₹1.6 lakh cr +14.5%
Defence Budget as % of GDP 1.8% 1.85% 1.9%

Summary/Static Details
Why in the news? Union Budget: How much Centre Allocates for Defense?
Total Defense Budget
₹6.8 lakh crore
Increase from FY2024-25 (BE)
9% (₹6.22 lakh crore in FY2024-25 BE)
Increase from FY2024-25 (RE)
6% (₹6.41 lakh crore in FY2024-25 RE)
Modernization & Procurement
₹1.8 lakh crore for new weapons & equipment
Revenue Expenditure
₹3.11 lakh crore
Pension Outlay
₹1.6 lakh crore
Defense Budget as % of GDP
1.9%
Key Focus Areas
– Indigenous defence manufacturing (Make in India)
– Modernization of Army, Navy, Air Force
– Cyber, space & AI-based warfare
– Infrastructure development along borders
Procurement List
Fighter jets, helicopters, warships, submarines, tanks, artillery, drones, missiles
Emphasis on Self-Reliance
Increased domestic purchases to reduce imports
Shivam

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