New Delhi: India on Saturday set aside Rs 6,81,210 crore as defence outlay for 2025-26 in a 9.53 per cent increase over the allocation of Rs 6.22 lakh crore for current fiscal amid the military’s push to procure new weapon systems in the face of security challenges from China and Pakistan.
Out of the total allocation, Rs 1,80,000 crore has been earmarked for capital expenditure that largely includes purchasing new weapons, aircraft, warships and other military hardware.
The budget for defence is around 1.9 per cent of the projected GDP and the increase in the allocation is around 6.2 per cent if compared to the revised allocation of Rs 6.41 lakh crore for the current fiscal The increase in allocation comes to 9.53 per cent if compared with the budgetary estimate of Rs 6.22 lakh crore for 2024-25.
The capital outlay in 2024-25 was Rs 1.72 lakh crore and revised estimates put the amount at Rs 1,59,500 crore that suggests an amount of around Rs 13,500 crore could not be spent by the military.
On the capital outlay for 2025-26, the defence ministry said Rs 1,48,722.80 crore is planned to be spent on “modernisation budget” to procure new military hardware and remaining Rs 31,277 crore is for expenditure on research and development and to create infrastructural assets.
It said Rs 1,11,544 crore that is 75 per cent of the modernisation budget has been earmarked for procurement through domestic sources. Twenty-five per cent of domestic share that is Rs 27,886 crore has been provisioned for procurement through domestic private industries.
The capital outlay for the armed forces in the next fiscal is 4.65 per cent higher than the budgetary estimate Rs 1.72 lakh crore in 2024-25. The revised capital outlay for 2024-25 has been estimated at Rs 1,59,500 crore.
The overall capital outlay has been put at Rs 1,92,387 crore out of which an amount of Rs 12,387 has been kept for defence services.
For the next fiscal, the revenue expenditure that accounts for day-to-day operating costs and salaries has been pegged at Rs Rs 4,88,822 crore that included Rs 1,60,795 crore for pensions.
The allocation for the defence budget is estimated at 1.91 per cent of the projected GDP in 2025-26.
Defence Minister Rajnath Singh welcomed the overall allocation for the defence budget saying Prime Minister Narendra Modi’s vision of making India self-reliant in defence sector has got a big boost.
The capital outlay of 1,80,000 crore for defence forces will further help in the modernisation, technological advancement and capabilities of our defence forces, he said.
This budget will further strengthen the security and ensure the prosperity of the country and take a “big leap” in realising the vision of Viksit Bharat (developed India), he said. Under capital expenditure, Rs 48,614 crore has been set aside for aircraft and aero engines while Rs 24,390 crore is allocated for the naval fleet.
An amount of Rs 63,099 crore has been set aside for other equipment.
A separate allocation of Rs 4,500 crore has been made for naval dockyard projects.
“In the current geopolitical scenario where the world is witnessing a changing paradigm of modern warfare, Indian armed forces need to be equipped with state-of-the-art weapons and have to be transformed into a technologically-advanced combat-ready force,” the defence ministry said referring to the capital outlay.
In order to improve the border infrastructure and facilitate the movement of armed forces personnel through tough terrains, Rs 7,146 crore has been allocated to the Border Roads Organisation (BRO) under capital head.
The allocation is 9.74 per cent higher than the budget estimate of 2024-25.
The financial provision made for BRO will not only promote strategic interest of the nation in border areas by constructing tunnels, bridges and roads such as LGG-Damteng-Yangtse in Arunachal Pradesh, Asha-Cheema-Anita in J and K and Birdhwal-Puggal-Bajju in Rajasthan, but will also boost socio-economic development.
According to budget documents, the revenue allocation for the armed forces was Rs 3,11,732 crore, which is 45.76 per cent of the total outlay.
The defence ministry said the government has been continuously allocating a higher amount for “sustenance and operational preparedness” of the armed forces since 2022-23.
Accordingly, a significant jump of 24.25 per cent has been made for it in 2025-26 in comparison to the budgetary estimate of the current fiscal.
“This allocation will address the requirement due to additional deployment of the forces in the border areas, hiring of vessels, increase in expenditure on longer sea deployment of ships and increase in flying hours for the aircraft,” the ministry said in a statement.
Under the salary head of revenue expenditure, Rs 1,97,317 crore has been allocated to take care of pay and allowances of the three services and any further requirement will be addressed during mid-year review, it said.
The budgetary allocation to the Defence Research and Development Organisation (DRDO) has been increased to Rs 26,816 crore from Rs 23,855 crore in 2024-25.
Out of this, a major share of Rs 14,923 crore has been allocated for capital expenditure and to fund the R&D projects.
“This will financially strengthen the DRDO in developing new technologies with special focus on fundamental research and hand-holding of the private parties through development-cum-production partners,” the ministry said.
It said the increased allocation under the capital head of DRDO will further provide adequate financial resources in funding the projects to be taken up in collaboration with private parties.
