The Union Budget for India’s Financial Year 2025-26 has allocated a significant Rs 6.81 lakh crore to the Ministry of Defence (MoD), reflecting the government's commitment to modernizing the Armed Forces and advancing its vision of a technologically advanced, self-reliant India, in line with Prime Minister Narendra Modi's 'Viksit Bharat @2047' initiative.
This represents a 9.53% increase over the previous fiscal year, and accounts for 13.45% of the total Union Budget, marking the largest allocation among ministries.
Capital Outlay and Operational Budget Breakdown
A substantial portion, Rs 1.80 lakh crore, or 26.43% of the total budget, is earmarked for Capital Outlay on Defence Services. Additionally, Rs 3.11 lakh crore is allocated for operational and sustenance expenses, including the pay and allowances of Armed Forces personnel, with Defence Pension receiving Rs 1.61 lakh crore. The Ministry of Defence has declared 2025-26 as the 'Year of Reforms,' focusing on simplifying the Defence Procurement Procedure to maximize the use of these funds.
Defence Minister Rajnath Singh’s Response to Budget
Defence Minister Rajnath Singh expressed his appreciation for Finance Minister Nirmala Sitharaman’s budget, emphasizing its focus on youth, farmers, women, and the middle class. “This budget will promote the development of youth, poor, farmers, women and all other sections of society. Recognising the contribution of the middle class, the budget has brought an unprecedented gift,” he said.
Focus on Self-Reliance and Domestic Procurement
In light of evolving global security dynamics, Rs 1.80 lakh crore has been dedicated to Capital Outlay, which includes Rs 1.49 lakh crore for modernisation through capital acquisitions and Rs 31,277 crore for research and development. This year’s allocation represents a 4.65% increase compared to last year’s estimate, with 75% of this funding earmarked for domestic procurement. This strategy is part of the government’s initiative to strengthen self-reliance in the defence sector by sourcing major acquisitions from Indian industries, particularly from the private sector.
Investment in Emerging Defence Technologies
Furthermore, the Indian Armed Forces are set to receive cutting-edge technology and resources for new defense domains, including Cyber and Space, along with emerging technologies such as AI, Machine Learning, and Robotics. Planned acquisitions, including high-altitude remotely piloted aircraft, next-generation submarines, and new aircraft, will be funded through this allocation.
Operational and Sustenance Budget for Armed Forces
On the operational side, Rs 3.11 lakh crore is allocated for sustaining the Armed Forces, with a significant portion directed towards essential supplies like fuel, ordnance stores, and maintenance. The government's focus on operational readiness is evident in the 24.25% increase in funding for FY 2025-26.
Increased Funding for DRDO
The Defence Research and Development Organisation (DRDO) also received an enhanced allocation of Rs 26,817 crore, a 12.41% increase from the previous year. This increase will support the development of new technologies, with a special focus on collaborations with private entities.
Strengthening Innovation Through iDEX Scheme
The government is also bolstering the startup ecosystem through an increase in the iDEX scheme's budget, facilitating innovation in defense technology. An allocation of Rs 450 crore will fund defense innovation projects under iDEX and its sub-scheme ADITI.
Enhanced Care for Veterans via ECHS and Defence Pension
Veteran care remains a priority, with Rs 8,317 crore set aside for the Ex-Servicemen Contributory Health Scheme (ECHS), marking a 19.38% increase from the previous year’s allocation. Similarly, a Rs 1.61 lakh crore allocation for Defence Pension ensures the well-being of retired service members and their families.
Indian Coast Guard Receives Significant Budget Increase
The Indian Coast Guard (ICG) will also benefit from a robust allocation of Rs 9,677 crore, a 26.50% increase from last year. This funding will enhance ICG's capabilities, providing advanced equipment and support for coastal security operations.
Border Infrastructure Development Through BRO Allocation
Finally, to improve border infrastructure, Rs 7,147 crore will be allocated to the Border Roads Organisation (BRO) for the construction of critical roads and infrastructure in strategic areas, such as Arunachal Pradesh, Jammu and Kashmir, and Rajasthan.
This initiative not only strengthens national security but also promotes regional development, creating job opportunities and fostering tourism.
India’s Vision of a Technologically Advanced and Self-Reliant Armed Forces
Overall, the FY 2025-26 Union Budget reflects the government's focus on advancing India’s defence capabilities, ensuring self-reliance, and providing robust support to Armed Forces personnel and veterans.
