India on Sunday announced a defence budget of Rs 7,84,678 crore for 2026-27, marking a 15 per cent increase over last year’s allocation of Rs 6.81 lakh crore. The rise, including a 22 per cent jump in capital outlay, comes after the historic success of Operation Sindoor and amid growing security challenges from China and Pakistan.

Of the total allocation, Rs 2,19,306 crore has been earmarked for capital expenditure to purchase new weapons, aircraft, warships, and other military hardware. This is 21.84 per cent higher than last year’s budget estimate of Rs 1.80 lakh crore. The allocation includes Rs 63,733 crore for aircraft and aero engines and Rs 25,023 crore for the naval fleet. Around 75 per cent of the capital budget, or Rs 1.39 lakh crore, is planned for procurement from domestic industries.

Revenue expenditure has been set at Rs 5,53,668 crore, which includes Rs 1,71,338 crore for pensions. Defence spending accounts for 2 per cent of the estimated GDP and 14.67 per cent of the Union government’s planned expenditure.

Finance Minister Nirmala Sitharaman also proposed exemptions from basic customs duty on components and raw materials for aircraft manufacture, repair, and maintenance, aimed at boosting India’s domestic aerospace and defence sector.

The budget enhances allocations for the Border Roads Organisation to Rs 7,394 crore, increases DRDO funding to Rs 29,100 crore with Rs 17,250 crore earmarked for capital expenditure, and raises the Ex-Servicemen Contributory Health Scheme to Rs 12,100 crore, a 45 per cent increase over last year.