Record Rs 6.81 Trillion Allocation for Defence in Union Budget 2025-26
ECONOMY & POLICY

Record Rs 6.81 Trillion Allocation for Defence in Union Budget 2025-26

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. 

Increased capital outlay for modernisation 

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. 

Boost to defence research and startups 

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. 

Strengthening armed forces' operational readiness 

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. 

Ex-servicemen welfare and defence pensions 

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. 

Indian Coast Guard and border infrastructure 

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.
 
(PIB.GOV)         

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. Increased capital outlay for modernisation 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. Boost to defence research and startups 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. Strengthening armed forces' operational readiness 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. Ex-servicemen welfare and defence pensions 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. Indian Coast Guard and border infrastructure 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. (PIB.GOV)         

Related Stories

Gold Stories

Next Story
Infrastructure Urban

EMO Energy and e-Sprinto to Deploy 8,000 Electric Scooters

EMO Energy has announced a partnership with electric two-wheeler maker e-Sprinto to deploy 8,000 electric scooters across India this financial year. The rollout will include both low-speed and high-speed models and will be phased across several cities. The scooters will be aimed at quick-commerce and last-mile delivery operations where uptime and energy efficiency are prioritised. EMO Energy said the scooters will use its patented ZenPac liquid-cooled battery platform with active thermal management, battery intelligence and energy optimisation to improve reliability and performance. ZenPac con..

Next Story
Infrastructure Energy

Octillion Opens Third EV Battery Plant in India

Octillion Power Systems has opened its third manufacturing facility in Halol, Gujarat, adding production capacity as demand for electric vehicle battery systems grows across passenger, commercial and public transport segments. The facility covers more than 13,000 square metres and was converted from an empty structure into an operational battery manufacturing plant in less than eight months. At full capacity the Gujarat plant will manufacture more than 48,000 battery systems annually, representing over three GWh of energy storage capacity. With the addition of the Halol facility Octillion's co..

Next Story
Real Estate

Land Reforms Could Unlock Urban Affordable Housing

Former cabinet secretary and NITI Aayog member Rajeev Gauba said India’s urban housing shortage could be tackled by unlocking 10 million (mn) vacant homes and using excess unutilised land held by public sector undertakings (PSUs). He said land availability lay at the heart of the problem and estimated that land accounted for as much as 50 to 70 per cent of total project cost. He urged states to waive land?use change fees and exempt stamp duty on land and transactions linked to affordable housing. He noted that urban population was projected to rise from 500 million to nearly 900 million by 2..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement