Defence Spending Expected to Stay Strong as Budget Focuses on Modernisation and Self-Reliance

The defence sector remains a key strategic priority for India as the country prepares for the Union Budget on February 1, driven by national security requirements and the push for self-reliance. In the previous Union Budget (FY2025–26), the government allocated approximately ₹6.21 lakh crore to the Ministry of Defence, making it the single largest allocation across all ministries.

Of the total defence allocation, around ₹1.72 lakh crore was earmarked for capital expenditure, focused on the acquisition of new platforms, weapons systems, and modern equipment for the armed forces. A significant policy focus continued on domestic procurement, with nearly 75% of the capital acquisition budget reserved for purchases from Indian industry under the ‘Atmanirbhar Bharat’ framework.

Expectation: Ahead of Budget 2026, defence analysts and industry stakeholders expect sustained funding for modernisation of the Army, Navy, and Air Force, alongside continued support for indigenous defence manufacturing. Emphasis is likely to remain on ongoing projects rather than large new procurement announcements.

Strategic Context: India’s defence posture is shaped by evolving regional security challenges and the need to reduce dependence on imports. Domestic defence production has crossed ₹1.2 lakh crore annually, and defence exports have grown steadily, reflecting progress in indigenisation efforts.

Prediction: While overall defence spending may grow in line with inflation and fiscal constraints, capital outlays for modernisation are expected to be protected. Greater emphasis on private sector participation, defence corridors, and export facilitation is also likely.

National Outlook and Hope: Sustained investment in defence is viewed as essential for safeguarding national security while strengthening domestic industrial capabilities. Continued focus on self-reliance could enhance technological capability, generate skilled employment, and position India as a competitive defence manufacturing and export hub over the medium term.