Union Budget 2025-26: ₹6.81 Lakh Crore Allocation for Defence to Strengthen India’s Armed Forces and Modernize Capabilities

New Delhi: In a significant move to modernize and strengthen India’s defense and security infrastructure, Union Finance Minister Nirmala Sitharaman presented the Union Budget for the Financial Year 2025-26 today. Aiming to further the vision of a technologically-advanced and self-reliant Armed Forces, the Budget allocated a record ₹6,81,210.27 crore to the Ministry of Defence (MoD), marking a 9.53% increase from the previous year’s budget.

Defence Modernization: A Focus on Capital Outlay

The budget proposed a substantial outlay of ₹1,80,000 crore for capital expenditure on defense services, which is 4.65% higher than the previous fiscal year’s allocation. This allocation aims to modernize India’s armed forces by acquiring state-of-the-art weapons and technology, aligning with the changing dynamics of modern warfare.

Out of this, ₹1,48,722.80 crore has been earmarked for capital acquisitions, marking it as the core of the modernization budget for the Indian Armed Forces. Additionally, ₹31,277.20 crore will be dedicated to research and development and the creation of infrastructure assets that support defense capabilities.

To promote self-reliance in defense manufacturing, a large portion of the capital procurement budget—₹1,11,544.83 crore (75%)—has been earmarked for procurement from domestic sources, including both public and private sector industries. This allocation will help India to bolster its defense industry and reduce dependency on foreign imports. The government’s focus is also on emerging technologies like Artificial Intelligence (AI), Machine Learning, and Robotics.

Operational Preparedness and Sustenance

The budget also addresses the operational readiness of the Armed Forces with an allocation of ₹3,11,732.30 crore for revenue expenditure, which covers pay and allowances of the personnel and operational maintenance costs. This is a 10.24% increase over the previous year, providing sufficient funds for the sustenance and operational preparedness of the forces.

Part of this allocation—₹1,14,415.50 crore—will cover non-salary expenditures such as fuel, ration, ordnance stores, and equipment maintenance. This will further ensure the armed forces’ operational readiness, particularly in light of the heightened tensions along India’s borders.

Increased Investment in Defence R&D

The government has significantly boosted the defense research and development sector with an increased allocation of ₹26,816.82 crore to the Defence Research and Development Organisation (DRDO). This 12.41% increase from the previous year will be utilized for the development of cutting-edge technologies, as well as facilitating collaborations with the private sector to accelerate innovation in defense technology.

Supporting Innovation in Defense Startups

The Budget also recognizes the role of private enterprises and startups in fostering innovation in the defense sector. A substantial ₹449.62 crore has been allocated for the iDEX scheme, which will help startups in the defense sector develop innovative technologies and solutions. This is a significant three-fold increase from the previous years, emphasizing the government’s commitment to boosting the defense startup ecosystem.

Welfare of Ex-Servicemen

Sitharaman also announced a provision of ₹8,317 crore for the Ex-Servicemen Contributory Health Scheme (ECHS), a 19.38% increase from the previous year, to provide enhanced healthcare services for veterans and their families. In addition, the defense pension budget for FY 2025-26 has been set at ₹1.61 lakh crore, reflecting a 13.87% increase, to meet the growing needs of pensioners and their families.

Strengthening Border Infrastructure

The Border Roads Organization (BRO) has been allocated ₹7,146.50 crore for the development of strategic infrastructure in border areas, which is 9.74% higher than last year’s allocation. This funding will be utilized for the construction of tunnels, roads, and bridges in challenging terrains, particularly in areas like Arunachal Pradesh, Jammu and Kashmir, and Rajasthan. These projects will not only strengthen India’s border security but also contribute to local economies and promote socio-economic development in border regions.