Defence Budget 2026: Armed forces get big boost in Sitharaman’s first post-Operation Sindoor outlay - full breakdown

Defence Budget 2026: The Prime Minister Narendra Modi-led Union government on Sunday set aside ₹7,84,678 crore as the defence outlay for 2026-27. This is a major boost to the Indian Armed Forces, which is 15 per cent higher than last year's allocation of ₹6,81,210 crore, the government said.

This is also the first budget presented by Union Finance Minister Nirmala Sitharaman after Operation Sindoor – the precision strikes by defence forces on terror camps in Pakistan and Pakistan-Occupied Jammu and Kashmir (POJK) in the aftermath of the Pahalgam terror attack in April 2025.

The total capital outlay has been pegged at ₹2,19,306 crore, according to the Budget document available on the Union Budget 2026 website.

Revenue expenditure has been put at ₹5,53,668 crore, including ₹1,71,338 crore for pensions, the document said.

“In addition to the modernisation of the Armed Forces and financing their regular requirement, the significantly enhanced allocation will also cater for the financial requirements that have arisen due to the emergency procurement of arms and ammunition made subsequent to Operation Sindoor under both the categories viz. Capital and Revenue,” the government said in a statement.

Towards becoming a Viksit Bharat.

Presenting the Budget for 2026-27 in Lok Sabha, Finance Minister Nirmala Sitharaman said India will continue to take steps towards becoming a Viksit Bharat.

The increased allocation signals a continued focus on military readiness, modernisation, and personnel welfare.

Under capital expenditure, ₹63,733 crore has been set aside for aircraft and aeroengines, while ₹25,023 crore has been allocated for the naval fleet.

Last Budget Allocation

In 2025-26, the government allocated ₹6,81,210 for the defence budget. The capital outlay was pegged at ₹1,80,000 crore, which increased to ₹1,86,454 crore at the revised estimate stage.

Experts said the Union Budget 2026 strongly reinforces India’s push toward innovation-led and self-reliant growth across pharma, technology, manufacturing, defence and aviation.

“The focused support for biopharma, deep tech, semiconductors and AI ecosystems, along with continued incentives for domestic manufacturing and defence and aerospace capability building, creates a strong foundation for long-term value creation, ” said A Siddhartha Sagar, Director, Avantel Limited.

These measures are expected to accelerate indigenous technology development, strengthen supply chains and open new high-value opportunities, Sagar added.

In her budget speech, FM Sitharaman proposed exempting basic customs duty on components and parts required for the manufacture of civilian, training and other aircraft.

She also announced the waiver of basic customs duty on raw materials imported for the manufacture of aircraft parts used for maintenance, repair, or overhaul requirements by units in the defence sector.

The two decisions are expected to help the defence aerospace industry.

Here is a breakdown of allocation:

-Defence services allocation amounting to ₹7.85 lakh crore for the Financial Year (FY) 2026-27.

-Large share of the defence budget to the tune of ₹2.19 lakh allotted for capital expenditure vis-à-vis ₹1.80 lakh crore which was allotted as BE of FY 2025-26

-Out of the total allocation made to the Ministry of Defence (MoD), a share of 27.95% is for capital expenditure, 20.17% for revenue expenditure on sustenance and operational preparedness, 26.40% for revenue expenditure on pay and allowances, 21.84% for Defence Pensions and 3.64% for civil organisations.

-For FY 2026-27, budgetary allocation under the capital head to the Defence Forces stands at ₹2,19,306.47 lakh crore, which is 21.84% more than the Budget Estimates of FY 2025-26

-Defence budget has made a provision of ₹3,65,478.98 crore for spending under revenue heads. This allocation is 17.24% higher than the BE 2025-26 allocation. Out of this, ₹1,58,296.98 crore has been allocated for operation and sustenance-related expenditure, and the remaining for salary and allowances.

-Budgetary allocation to BRO under Capital for BE 2026-27 has been enhanced to ₹7,394 crore from ₹7,146.50 crore for FY 2025-26.

-The budgetary allocation to the Defence Research and Development Organisation (DRDO) has been increased to ₹29,100.25 crore in FY 2026-27 from ₹26,816.82 crore in FY 2025-26. Of this allocation, a major share of Rs. 17,250.25 crore is allocated to capital expenditure.

-Total budgetary allocation on account of Defence pensions stands at ₹1,71,338.22 crore, which is 6.56% higher than the allocation made during 2025-26 at the BE stage.