Finance minister Nirmala Sitharaman on Saturday announced an allocation of ₹6.81 lakh crore for the defence sector for 2025-26 with a renewed focus on modernisation of the armed forces amid growing threats from China on the northern borders, especially in eastern Ladakh.
The defence budget is estimated to constitute 1.91 per cent of the projected GDP in 2025-26 and is an increase of 9.53 per cent over the outlay for 2024-25 (₹6.2 lakh crore).
The pension category saw an increase of 13.8 per cent at ₹1,60,795 crore against ₹1,41,205 crore last fiscal.
Of the total allocation, ₹1.8 lakh crore has been earmarked for the modernisation of the military, which includes the procurement of fighter jets, warships, helicopters, submarines, tanks, artillery guns, drones and missiles.
“In the current geopolitical scenario where the world is witnessing a changing paradigm of modern warfare, the Indian Armed Forces need to be equipped with state-of-the-art weapons and have to be transformed into a technologically advanced combat-ready force. Keeping this in view, ₹1,80,000 crore has been allocated on the capital outlay of the defence forces,” the defence ministry said in a statement.
Of this, ₹1,48,722.80 crore is expected to be spent on capital acquisition for the armed forces and the remaining ₹31,277.20 crore on research and development and creation of infrastructural assets across the country.
A substantial portion (₹1.12 lakh crore) of the modernisation outlay has been allocated for buying weapons and equipment from domestic suppliers as part of the Centre’s push for self-reliance in the defence sector.
The revenue expenditure, which accounts for day-to-day operating costs and salaries, has been pegged at ₹4,88,822 crore, including ₹1,60,795 crore for pensions.
The budget documents, however, do not show the specific allocations for the army, navy and the air force.
Overall, the defence budget is 13.45 per cent of the Union budget, which is the highest compared to other ministries.
The budget seeks to provide impetus to the development of border infrastructure to boost military mobility and logistics support for forces deployed in frontier areas along China and Pakistan frontiers. A total of ₹7,146.50 crore has been allocated for the Border Roads Organisation (BRO) under the capital head, which is 9.74 per cent more than the previous year.
The financial provision made for the BRO will not only promote the strategic interest of the nation in border areas by constructing tunnels, bridges and roads such as LGG-Damteng-Yangtse in Arunachal Pradesh, Asha-Cheema-Anita in Jammu and Kashmir and Birdhwal-Puggal-Bajju in Rajasthan, but will also boost socio-economic development, the defence ministry said.
Government sources said the armed forces had drawn up an ambitious modernisation plan. The air force wants several combat planes and helicopters to replace its Soviet-era fleet. The navy has planned to procure a dozen submarines to counter the ever-expanding presence of China in the Indian Ocean. The army, a large part of which is deployed along the India-China and India-Pakistan frontiers, plans to procure assault rifles, surveillance drones and body armour to bolster its combat prowess.