Defence gets big firepower amidst Pak, China threats

New Delhi: Fulfillingthe long-standing demands of armed forces to increase capital outlay for defence to provide fiscal headroom for modernisation, the Union Budget allocated massive Rs 7.85 lakh crore for defence. This hints at the Centre's renewed focus on military readiness and modernisations amid a volatile geopolitical scenario and heightened threats on both eastern and western borders with China and Pakistan, respectively.

As per official data, the defence outlay for 2026-27 is pegged at Rs 7,84,678 crore, compared to Rs 6,81,210 crores in the previous fiscal. The most significant part of the increase was the steep increase in defence capital expenditure, which was increased by 28 per cent to Rs 2.31 lakh crore vis-a-vis Rs 1.80 lakh crore last year. Of this, Rs 63,733 crore is allocated for aircraft and aero engines, and Rs 25,023 crore for the naval fleet.

The increased capital outlay is set to fund major acquisitions of advanced weapon systems, including the biggest-ever fighter aircraft deal worth Rs 3.25 crore, India inked with France to purchase 114 Rafale jets and domestic defence manufacturing.

Sitharaman also announced exemption of basic customs duty on raw material imported for the manufacturing of parts used in the maintenance, repair and overhaul of defence units.