+
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 Transport

Mumbai-Ahmedabad Bullet Train’s Surat-Vapi Section Set for 2027

The first section of the Mumbai-Ahmedabad Bullet Train corridor, linking Surat and Vapi, is targeted to begin services in 2027. Construction is expected to be completed by December 2026, while Railway Minister Ashwini Vaishnaw has indicated that an inauguration could take place around the middle of 2027. The National High Speed Rail Corporation (NHSRCL) said the train being manufactured in India is expected to reach the tracks around April or May 2027. The train will undergo extensive testing before the section is opened for passenger services. The project began construction in 2021 and includ..

Next Story
Infrastructure Transport

Indian Railways Approves Four Projects Worth Rs. 7.36 bn Across Four States

Indian Railways has approved four projects with a combined value of Rs. 7.36 bn across Uttar Pradesh, Maharashtra, Andhra Pradesh and Gujarat. The programme covers train protection, signalling, electric traction supply and a road overbridge, with each project assigned to a different railway zone. In Uttar Pradesh, Rs. 2.52 bn has been approved to extend the Kavach 4.0 automatic train protection system across 607.7 km in the Lucknow Division of North Eastern Railway. The system monitors train movements and can apply the brakes if a driver fails to observe a signal or exceeds a safe speed. The w..

Next Story
Infrastructure Urban

Chandru Raheja Sells 1.49% Stake in Mindspace REIT for Rs. 5 bn

Billionaire Chandru Lachmandas Raheja has sold a 1.49 per cent holding in Mindspace Business Parks REIT for Rs. 5 bn through a bulk deal on the BSE. The transaction involved 9.9 mn units and was executed at an average price of Rs. 505 per unit, according to exchange data. Following the sale, units of Mindspace Business Parks REIT were trading 0.18 per cent lower at Rs. 504.05 on Tuesday. Exchange data did not identify the buyers involved in the transaction. Raheja is the chairman of real estate company K Raheja Corp. The sale involved 99,00,990 units, representing 1.49 per cent of the Mumbai-b..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

SPECIAL OFFER
QR Code