Union Budget 2026: Defence allocation jumps to Rs 7.84 lakh crore, focus on capital spend and aerospace

In comparison, the defence budget for 2025–26 was set at Rs 6,81,210 crore, with a capital outlay of Rs 1,80,000 crore, later revised to Rs 1,86,454 crore at the revised estimates stage.

1 min readFeb 1, 2026 02:18 PM IST

Defence

The government has increased defence spending in the Union Budget 2026–27, setting aside Rs 7,84,678 crore for the sector, up from Rs 6,81,210 crore in the previous financial year.

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Of the total allocation, capital expenditure has been pegged at Rs 2,19,306 crore, while revenue expenditure stands at Rs 5,53,668 crore, which includes Rs 1,71,338 crore earmarked for pensions. Within the capital outlay, Rs 63,733 crore has been allocated for aircraft and aero engines, and Rs 25,023 crore for the naval fleet.

In comparison, the defence budget for 2025–26 was set at Rs 6,81,210 crore, with a capital outlay of Rs 1,80,000 crore, later revised to Rs 1,86,454 crore at the revised estimates stage.

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Announcing key policy measures in her Budget speech, Finance Minister Nirmala Sitharaman proposed exempting basic customs duty on components and parts used in the manufacture of civilian, training and other aircraft. She also announced a waiver of basic customs duty on raw materials imported for manufacturing aircraft parts used for maintenance, repair and overhaul (MRO) by defence-sector units.

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