New Delhi: In a major boost to the Defence sector, India increased its defence spending in the Union Budget 2026–27. Finance Minister Nirmala Sitharaman on Sunday (February 1) announced an outlay of Rs 5.95 lakh crore for the Defence sector. It is a massive hike of 21 per cent as compared to the previous year's defence budget of Rs 4.92 lakh.
The total defence spending has risen to 11 per cent of the GDP in the financial year 2026. In 2025, it was 8 per cent. The defence budget has been increased amid ongoing security threats from Pakistan and China, especially after Operation Sindoor, which was launched against terro camps in Pakistan and Pakistan-Occupied Kashmir (PoK).
The focus of this higher allocation will be on achieving atma nirbharta (self-reliance) and modernisation of Defence forces.
Since 2020, India’s defence expenditure has reportedly increased by more than 40 per cent, recording annual growth of around 9.2 per cent over the past five years.
Defence Budget 2025:
Last year, the Union Budget made a provision of Rs 6,81,210.27 crore for FY 2025–26 for the Ministry of Defence (MoD). This allocation was 9.53 per cent more than the Budgetary Estimate of FY 2024–25 and stood at 13.45 per cent of the Union Budget, which was the highest among the Ministries.
Out of this, Rs 1,80,000 crore, i.e., 26.43 per cent of the total allocation, was allocated for Capital Outlay on Defence Services. On the Revenue Head, allocation for the Armed Forces stood at Rs 3,11,732.30 crore, which is 45.76 per cent of the total allocation. Defence Pension received a share of Rs 1,60,795 crore, i.e., 23.60 per cent, and the balance Rs 28,682.97 crore, i.e., 4.21 per cent, is for civil organisations under the Defence Ministry.
