India has significantly increased its defence expenditure to ₹7.85 lakh crore for the financial year 2026-27, reflecting its growing focus on national security and military modernisation. The allocation, announced in the Union Budget on 1 February 2026, is 15.19% higher than the previous financial year’s Budget Estimates. It represents approximately 2% of the country’s estimated Gross Domestic Product (GDP), making defence the largest recipient of government expenditure among ministries.
The increased financial support is expected to help the Indian Army, Indian Navy and Indian Air Force strengthen their operational capabilities and address emerging security challenges. Of the total allocation, ₹2.19 lakh crore has been earmarked for capital expenditure, supporting the acquisition of modern military equipment, advanced weapons, fighter aircraft, warships, submarines, drones and other critical defence platforms.
Domestic defence production remains a major focus of the government’s strategy. Approximately ₹1.39 lakh crore has been allocated for procurement from domestic defence industries, while 75% of the capital acquisition budget has been reserved for Indian manufacturers. This approach is expected to encourage private-sector participation, expand indigenous production and reduce India’s reliance on imported military equipment.
The government has also increased financial support for defence research and technological innovation. The Defence Research and Development Organisation (DRDO) has received ₹29,100.25 crore for FY 2026-27, compared with ₹26,816.82 crore in the previous financial year. The funding will support research infrastructure and the development of indigenous weapons, surveillance systems, electronic warfare technologies and other advanced military capabilities.
Defence Minister Rajnath Singh reiterated the importance of strengthening India’s military capabilities during a Ministry of Defence Consultative Committee meeting in Jaisalmer, Rajasthan, on 3 November 2026. The discussions covered military modernisation, evolving security requirements and the growing role of advanced technologies in future warfare. Singh also emphasised the government’s commitment to strengthening domestic defence manufacturing and equipping the Armed Forces with modern systems.
India has additionally set ambitious targets of achieving ₹3 lakh crore in annual defence production and ₹50,000 crore in defence exports by 2029. These objectives underline the country’s intention to establish a stronger domestic defence industrial base while expanding its position in the global defence market.
The record defence allocation marks an important step in India’s long-term military development strategy. Effective utilisation of the funds, timely procurement and successful development of indigenous technologies will be essential to improving operational readiness and building a more self-reliant and technologically advanced Armed Forces.