Finance Minister Nirmala Sitharaman announced a substantial Rs 7.85 lakh crore overall defence budget for FY2026/27 during her Union Budget 2026 presentation on Sunday afternoon, February 1, marking a significant boost to India’s military modernisation amid evolving security challenges.
The Defence Ministry’s capital outlay for procurement and upgrades jumped 21.84 per cent to Rs 2.19 lakh crore from Rs 1.8 lakh crore in FY26, prioritising advanced equipment and indigenous manufacturing under the Atmanirbhar Bharat initiative. This sharp increase underscores the government’s commitment to enhancing combat readiness, with Rs 63,733 crore specifically earmarked for aircraft and aero engines to bolster the air force’s capabilities.
Revenue allocations for defence services—covering day-to-day operations such as maintenance, ammunition, fuel, repairs, and support staff salaries—saw a 17.24 per cent hike, ensuring operational efficiency without compromising frontline preparedness. Pensions for defence personnel received a 6.53 per cent increase to Rs 1.71 lakh crore, reflecting sustained welfare measures for ex-servicemen and their families.
This comprehensive allocation positions defence as one of the fastest-growing sectors in the Budget, aligning with projections of sustained geopolitical tensions and the need for technological superiority in land, air, and naval domains. Market analysts anticipate positive reactions in defence stocks like HAL, BEL, and Mazagon Dock during the special Sunday trading session.
