Nirmala Sitharaman before presenting the Union Budget 2025-26 before Parliament.
New Delhi: The finance minister, Nirmala Sitharaman, announced a defence budget of ₹6.81 lakh crore for the fiscal year 2025-26, on Saturday, marking an increase of around 9.5% from the previous year’s allocation of ₹6.22 lakh crore. This budget is aimed at bolstering national security and supporting the government’s strategic focus on self-reliance and modernization.
In her eighth consecutive budget speech, Sitharaman emphasized the importance of strengthening India’s defence capabilities through smart investments.
The Ministry of Defence will receive the largest allocation, with ₹4.88 lakh crore earmarked for revenue expenditure, which includes salaries, pensions, and daily operational costs. A defence pension of ₹1.60 lakh crore has been earmarked for FY 2025-26, compared to ₹1.57 lakh crore revised estimate and ₹1.41 lakh crore budget estimate.
Additionally, ₹1.92 lakh crore has been allocated for capital expenditure, which will be used for acquiring new equipment, modernization projects, and infrastructure development.
A significant portion of the capital expenditure, ₹48,614 crore, has been allocated for aircraft and aircraft engines, while ₹24,390 crore has been set aside for the naval fleet. The budget also includes ₹63,099 crore for other defence equipment. This increase in capital expenditure is in line with the government’s commitment to the “Make in India” initiative and promoting indigenous defence production.
The budget announcement also highlighted the progress made in the defence sector, with the defence ministry achieving a record indigenous defence production value of ₹1.26 lakh crore in 2024. Defence exports also reached ₹21,083 crore, which highlighted India’s growing capabilities in the global defence market.
The Defence Research and Development Organization (DRDO) has received ₹14,923 crore to conduct research and development work. For aircraft and aero engines, ₹48,614 crore has been allocated this financial year, compared to ₹46,591 crore last year.
A sum of ₹1,494 crore has been allocated for investment in the seven public enterprises that were corporatized from Defence Ordnance Factories.
The ongoing standoff at the line of actual control has prompted the government to maintain its focus on enhancing border infrastructure. The Border Roads Organization (BRO) has been allocated ₹7,134 crore, up from ₹6,500 crore.
Sitharaman further announced ambitious targets to more than triple the defence production to ₹3 lakh crore by FY29 and increase exports to ₹50,000 crore.
The launch of the Tata Aircraft Complex and the induction of homegrown platforms, like the light tank “Zorawar”, underscore the progress toward self-sufficiency in defence production.
The budget also includes measures to support the growth of micro, small, and medium enterprises (MSMEs) in the defence sector, with the government revamping its credit guarantee scheme by infusing an additional ₹9,000 crore. This initiative is designed to facilitate easier access to credit for MSMEs, encouraging entrepreneurship and contributing to job creation.
Overall, the allocation for defence in Sitharaman’s Union Budget 2025 stresses on the government’s commitment to enhancing India’s defence capabilities through increased funding, modernization, and self-reliance.
