Finance Minister Nirmala Sitharaman announced the capital expenditure on Sunday ₹5.95 lakh crore for defence, compared to last year’s budget ₹4.92 crores. While total capital expenditure has increased by about 22% from last year’s allocation, the budget for modernization alone has increased by 24%.
Operation Sindhu themed tableau on display during the press preview before the Republic Day parade. (PTI)The ministry sought a 20% increase, sources familiar with the matter said, with a fresh boost targeting long-range standoff capabilities, military aircraft, missiles and armed drones after Operation Sindur.
Defense Ministry officials feel that the budgetary incentives will enhance their ability to modernize the armed forces and equipment. Several projects related to Rafale fighter jets, submarines and unmanned aerial vehicles are in the pipeline, sources added.
In FY26, the Ministry of Defense had a budget for capital expenditure ₹1.8 lakh crore. Includes capex allocation ₹63,733 crore for aircraft and aero engines.
In the year 2025-26, the Govt ₹6.8 lakh crore for defense budget. Capital expenditure was determined ₹1.8 lakh crore, which has increased ₹1.87 crore in revised estimates.
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In his budget speech on Sunday, the Finance Minister said, “It is proposed to give basic duty exemption on imported raw materials for manufacturing of aircraft parts for maintenance, repair or overhaul requirements of units in the defense sector.”
He also announced basic tariff exemptions on components and parts required for manufacturing civil, training and other aircraft.
