India increased its defence spending in the Union Budget 2026. Finance Minister Nirmala Sitharaman announced an allocation of ₹7.85 lakh crore, which is a 15.2% rise from the ₹6.81 lakh crore budgeted for FY26.
This increase includes a 20.1% boost in overall defence capital expenditure to ₹2.31 lakh crore. It highlights the government’s focus on long-term capability building.
Union Budget 2026 increase Defence Budget to ₹7.85 Lakh Crore
The higher budget comes as India balances its security needs with fiscal priorities and pushes for more self-reliance in defence manufacturing. The emphasis is on modernization, quicker procurement, and reducing reliance on imports. In this context, the modernization budget raised by 24%, indicating a stronger focus on upgrading platforms, weapons, and technology.
India’s defence spending increased over the past five years, with an average annual growth of around 9.2% since the 2020 Budget.
Capex hit ₹2.31 Lakh Crore
Capital expenditure has remained a key focus due to the need to speed up modernization and expand domestic manufacturing. The latest Union Budget 2026 reinforces this trend, with capital spending now taking a larger share of the overall defence budget.
Defence capital expenditure has surged from ₹0.95 lakh crore in FY19 to ₹2.31 lakh crore in FY27, according to data from the Ministry of Defence. Capital spending now represents nearly 30% of total defence expenditure, emphasizing the ongoing push for capability building and local manufacturing.