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