Union Budget: Centre sets aside ₹6.8 lakh crore for defence
A chunk of the outlay has been allocated for buying weapons, systems and equipment from domestic suppliers to achieve the self-reliance goal.
The Centre on Saturday set aside more than ₹6.8 lakh crore for the defence sector in the Union Budget for FY2025-26, including ₹1.8 lakh crore for the modernisation of the military, whose shopping list includes new fighter jets, helicopters, warships, submarines, tanks, artillery guns, drones, and rockets and missiles.
A significant portion of the modernisation outlay has been allocated for buying weapons, systems and equipment from domestic suppliers to achieve the self-reliance goal, a top priority for the Narendra Modi government.
The year’s allocation is 9.5% higher than what it was in the budget estimates ( ₹6.22 lakh crore) for the financial year 2024-25, and around 6% more than last year’s revised estimates ( ₹6.41 lakh crore), budget documents showed. To be sure, finance minister Nirmala Sitharaman did not spell out the defence allocation in her budget speech.
“This year’s defence budget of more than ₹6.81 lakh crore is about 9.5% more than last year’s budget allocation. Modernisation of the defence forces has been the priority of our government, and ₹1.8 lakh crore has been earmarked for this. It will help increase the capabilities of the armed forces,” Union defence minister Rajnath Singh said.
Singh said 75% of the modernisation outlay will be spent on buying weapons and equipment from domestic sources to boost self-reliance in the defence manufacturing sector. Last year too, the government earmarked 75% of the capital allocation for local procurement.
The budget this year includes a revenue expenditure of ₹3.11 lakh crore and a pension outlay of ₹1.6 lakh crore. It accounts for 1.9% of the India’s projected gross domestic product (GDP) for 2024-25 and 13.45% of the government’s budget.
Revised estimates in the budget documents show that the armed forces were unable to spend ₹12,500 crore of last year’s capital outlay of ₹1.72 lakh crore.
As the nature of warfare is changing in the current geopolitical scenario, the Indian military needs to be equipped with modern weapons and must be transformed into a technologically advanced and combat-ready force, the defence ministry said.
“The capital allocation is 4.65% higher than the budget estimates of FY 2024-25,” it said in a statement.
Of the ₹1.8 lakh crore, ₹1.48 lakh crore is to be spent on capital acquisition (modernisation budget) and remaining towards capital expenditure on research and development and creation of infrastructural assets across the country, the ministry said.
Since 2020-21, a substantial share of the modernisation budget is annually earmarked for capital procurement from the domestic sector.
“To encourage the private sector, a notable percentage of domestic share is further earmarked for acquisition from the private industries. For FY2025-26, ₹1.11 lakh crore (75% of the modernisation budget) has been earmarked for procurement through domestic sources and 25% of the domestic share ( ₹27,886.21 crore) has been provisioned for procurement through domestic private industries,” the statement added.
The budget also seeks to provide impetus to the development of border infrastructure to boost military mobility and logistics support for deployed forces in forward areas. It includes ₹7,146.50 crore for the Border Roads Organisation (BRO) under the capital head, which is 9.74% more than what it was in last year’s budget estimates.
The allocation for the Defence Research and Development Organisation (DRDO) stands at ₹26,816.82 crore compared to last year’s ₹23,855.61 crore, a 12.41% jump over the 2024-25 budget estimates.
“Of this, a major share — ₹14,923.82 crore — has been allocated for capital expenditure and to fund R&D projects. This will financially strengthen the DRDO in developing new technologies with special focus on fundamental research,” the defence ministry said.
The budget also includes ₹450 crore to promote innovation, entrepreneurship and self-reliance in the defence manufacturing sector. This amount has been set aside for the iDEX (Innovations for Defence Excellence) and ADITI (Acing Development of Innovative Technologies with iDEX) schemes.
