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  • Defence sector capex increases by 4.6%
  • Record defence exports reach Rs 21,083 crore
  • Railways and Roads capex remains unchanged

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Budget 2025: Rs 11.21 lakh crore allocated for capital expenditure, 0.9% increase from 2024-25

FM Nirmala Sitharaman announced the Union Budget for 2025-26 with a focus on capital expenditure, including a 4.6% hike in defence spending, a stable budget for railways and roads, and continued growth in defence exports.

Updated: Sep 02, 2022 10:53
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Editorji News Desk

Budget 2025: Rs 11.21 lakh crore allocated for capital expenditure, 0.9% increase from 2024-25

In the Union Budget for 2025-26, Finance Minister Nirmala Sitharaman has allocated Rs 11.21 lakh crore for capital expenditure (capex), marking a 0.9 per cent increase from last year’s Budget Estimate of Rs 11.11 lakh crore.

However, when compared to the revised estimate for 2024-25 of Rs 10.18 lakh crore, the 2025-26 budget allocation is significantly higher. Capital expenditure is used for setting up long-term physical or fixed assets.

The defence sector sees the largest hike in capital expenditure, with a 4.6 per cent increase for the financial year 2025-26, reaching Rs 1.8 lakh crore.

This is up from the budget estimate of Rs 1.72 lakh crore in 2024-25, which was later revised downward to Rs 1.59 lakh crore. The 2025-26 capex target for defence is 13.3 per cent higher than the revised estimate for 2024-25.

This increase reflects the government's drive to fuel substantial and sustained growth in the defence sector, primarily through higher capital expenditure. Key factors driving this growth include a sharp rise in defence exports and a concerted focus on domestic manufacturing.

Over the past decade, the government has successfully implemented a paradigm shift in policy, procedures, and mindset to accelerate domestic defence manufacturing. The government has rolled out several policy measures and reforms aimed at fostering indigenous design, development, and production of defence equipment, thus advancing self-reliance in defence manufacturing.

Significant investments are being made in the defence and aerospace sectors, with the establishment of numerous defence hubs. Additionally, several global companies have either shared or expressed a willingness to share critical defence and aerospace expertise with India.

Defence exports from India reached a record Rs 21,083 crore (approximately USD 2.63 billion) in the financial year 2023-24, reflecting a 32.5 per cent increase from the previous year’s Rs 15,920 crore.

Defence exports have grown an impressive 31-fold over the past decade, compared to 2013-14. Additionally, the total value of defence production in India rose by 17 per cent to Rs 126,887 crore in the last fiscal year.

In terms of railways and roads—two sectors crucial to India's economy—the capex targets for 2025-26 remain unchanged.

The capital outlay for Railways is pegged at Rs 2.52 lakh crore, the same as the allocation for 2024-25. Likewise, the capital outlay for Roads remains consistent at Rs 2.72 lakh crore, matching both the Budget Estimate and the Revised Estimate for 2024-25.

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