The Union Budget 2025-26 has allocated a record Rs 6,812.1 billion to the Ministry of Defence (MoD), reflecting a 9.53% increase over the previous financial year. This accounts for 13.45% of the total Union Budget, the highest among all ministries, aligning with the government’s vision of a technologically advanced and self-reliant military under ‘Viksit Bharat @ 2047.’

 

Of the total allocation, Rs 1,800 billion (26.43%) is earmarked for capital outlay on defence services, while Rs 3,117.32 billion (45.76%) is designated for revenue expenditure, covering pay, allowances, and operational preparedness. Defence pensions receive Rs 1,607.95 billion (23.60%), and Rs 2,86.82 billion (4.21%) is allocated to civil organisations under the MoD. The ministry has also declared 2025-26 as the ‘Year of Reforms,’ focusing on modernisation and streamlining procurement processes. 

Given evolving global security challenges, the capital outlay for defence has been increased by 4.65% from last year, with Rs 1,487.22 billion dedicated to modernisation. The government continues its emphasis on self-reliance, earmarking 75% of the modernisation budget (Rs 1,115.44 billion) for domestic procurement, including Rs 278.86 billion for private sector acquisitions. Major planned acquisitions include high and medium-altitude unmanned aerial vehicles, deck-based aircraft, next-generation submarines, and warships. Investments in emerging technologies such as AI, machine learning, and robotics will also be supported. 

The Defence Research and Development Organisation (DRDO) has received a 12.41% increase in its budget, now at Rs 268.16 billion, with Rs 149.23 billion dedicated to capital expenditure. This will support fundamental research and collaborations with private firms through the Technology Development Fund. Additionally, the Innovation for Defence Excellence (iDEX) initiative has been allocated Rs 4.49 billion, nearly tripling in two years, to foster defence startups and innovation. 

Revenue expenditure for armed forces has increased by 10.24% to Rs 3,117.32 billion, with Rs 1,144.15 billion allocated for non-salary expenses such as fuel, ordnance, and equipment maintenance. This budget accounts for higher deployment in border areas, extended naval operations, and increased flying hours for aircraft. The salary component, at Rs 1,973.17 billion, will cover pay and allowances, with potential adjustments in the mid-year review. 

The government has allocated Rs 83.17 billion for the Ex-Servicemen Contributory Health Scheme (ECHS), marking a 19.38% increase. Additionally, Rs 1.61 trillion has been set aside for defence pensions, a 13.87% rise from last year, ensuring adequate funds for the One Rank One Pension (OROP) scheme and adjustments for inflation. 

The Indian Coast Guard's budget has surged by 26.50% to Rs 96.76 billion, including a 43% jump in capital outlay for acquiring advanced helicopters, aircraft, and patrol vessels. Meanwhile, Rs 71.46 billion has been allocated to the Border Roads Organisation (BRO), a 9.74% increase, to enhance strategic infrastructure, including roads and tunnels in critical border regions. 

With a significant boost in allocations across all key defence sectors, the 2025-26 budget aims to modernise the armed forces, promote indigenous manufacturing, and strengthen national security.