Buck for the bang: Post Operation Sindoor, defence bags its biggest hike

With border security challenges from China and Pakistan increasing, FM Nirmala Sitharaman on Sunday allocated an all-time high of Rs 7.8 lakh crore as defence outlay, a steep 15% hike over last year's Rs 6.8 lakh crore, working out to around 2% of the projected GDP for the next financial year.

The total defence budget proposed is 14.7% of the govt expenditure and is the highest among all ministries.




In addition to modernising armed forces as part of govt's vision of technologically advanced and 'aatmanirbhar' armed forces, the increased allocation will also cover financial requirements arising from the emergency procurement of arms and ammunition following Operation Sindoor. Of the total allocation, 27.9% is for capital expenditure, 20.2% for revenue expenditure on sustenance and operational preparedness, 26.4% for revenue expenditure on pay and allowances, 21.8% for defence pensions and 3.6% for civil organisations.

During FY 2025-26, up to the third quarter till Dec 2025, defence ministry concluded contracts worth Rs 2.1 lakh crore and has, so far, given acceptance of necessity approval for over Rs 3.5 lakh crore. The projects under capital acquisition will equip forces with next-generation fighter aircraft, smart and lethal weapons, ships, submarines, UAVs, drones and specialist vehicles.

Defence ministry's policy to earmark funds to boost domestic industries through budgetary policies has been strengthened by earmarking Rs 1.4 lakh crore, which is 75% of capital acquisition budget for procurement through domestic industries.

Sitharaman announced waiving basic customs duty on raw materials imported for the manufacture of parts of aircraft to be used in maintenance, repair or overhaul requirements by units in the defence sector.

Almost Rs 63,734 crore of capital expenditure has been earmarked for aircraft and aero engines at a time when IAF is looking at buying 114 French-origin Rafale jets to bolster its combat fleet.

Defence minister Rajnath Singh expressed gratitude to PM Modi and FM for the significant hike in the outlay.