Budget 2026: Amid Rafale buys, govt allocates Rs 63,733 crore for aircraft, engines to give more air power against Pakistan, China

The government has stepped up defence spending in Budget 2026, with a sharp focus on capital expenditure for modernisation. Under the capital outlay, Rs 63,733 crore has been earmarked for aircraft and aero engines, while Rs 25,023 crore has been allocated for strengthening the naval fleet. Overall, the defence ministry has received a 15 per cent increase in its budgetary allocation, with capital outlay rising 21.84 per cent to Rs 2.19 lakh crore in FY 2026–27 from Rs 1.80 lakh crore in the previous fiscal.

The Defence Ministry has major projects in the pipeline, such as contracts for Rafale fighter jets, submarines, and unmanned aerial vehicles.

The Defence budget (civil) has been reduced by 0.45 per cent as compared to last year's Rs 28,554.61 crore.


Meanwhile, the Defence Services (Revenue) and Capital Outlay were allocated Rs 3,65,478.98 crore and Rs 2,19,306.47 crore, respectively, reflecting jumps of 17.24 per cent and 21.84 per cent.

The allocation for Defence Pensions also saw a rise, with the Centre allotting Rs 1,71,338.22 crore.

In a boost to the defence sector, Union Finance Minister Nirmala Sitharaman announced, "It is proposed to exempt basic customs duty on raw materials imported for the manufacture of parts of aircraft to be used in maintenance, repair or overall requirements by units in the defence sector."

Defence Secy welcomes move

Defence Secretary Rajesh Kumar Singh on Sunday welcomed the Union Budget 2026-27, describing it as a "significant boost" for the country's defence preparedness.

He highlighted that the allocations will strengthen modernisation, capital expenditure, and overall operational capabilities of the Indian Armed Forces.

"I am happy with the budgetary allocations announced by the Finance Minister as part of this year's budget... The overall budget for the Ministry of Defence is going to be 7.85 lakh crores, which is a 15 % increase over the allocation for last year. More importantly, in the area of CAPEX, the overall capital expenditure outlay has gone up by 21 % to about 2.9 lakh crores. And most critically, when it comes to the modernisation, budget is actually spent on modern equipment and other technological upgrades required for boosting the capabilities of our armed forces," he said.