India's Union Budget for 2025-26 has unveiled a historic allocation of Rs 6.81 lakh crore for the Ministry of Defence (MoD), underscoring the government's commitment to modernizing its defense forces and addressing national security challenges. Presented by Finance Minister Nirmala Sitharaman on February 1, 2025, this budget sees a notable increase of 9.53% over the previous year, emphasizing self-reliance and technological advancements.
The substantial allocation reflects the government's strategic focus to equip India's Armed Forces with cutting-edge technology, aligning with Prime Minister Narendra Modi's vision of 'Viksit Bharat' (Developed India) by 2047. The total defence budget accounts for 13.45% of the Union Budget, the highest proportion among all ministries, highlighting the priority placed on national security.
A significant portion of the budget, approximately Rs 1.80 lakh crore, is designated for capital outlay, which is aimed at modernizing the Armed Forces. This allocation focuses on acquiring advanced technologies, weaponry, and platforms, with Rs 1.48 lakh crore earmarked for new procurements. Importantly, around 75% of this capital expenditure is directed toward domestic procurement, reinforcing the government's push for self-sufficiency within the defense sector.
Within the capital outlay, Rs 31,277 crore is allocated for research and development (R&D) and infrastructure growth, illustrating the government’s commitment to fostering innovation within the defense ecosystem. The enhanced R&D budget—amounting to Rs 26,816 crore—represents an increase of 12.41% compared to last year, and aims to integrate private sector expertise alongside government initiatives.
Another focal point of the budget is the welfare of ex-servicemen, underscoring the government's recognition of the contributions made by veterans. The MoD has allocated Rs 1.61 lakh crore toward defence pensions, ensuring timely support to these individuals, particularly as inflation continues to affect living costs. An additional Rs 8,317 crore has been earmarked for the Ex-Servicemen Contributory Health Scheme (ECHS), representing significant growth over last year's budget.
Emerging technologies play a pivotal role in the new budget, with allocations set aside for the integration of artificial intelligence, machine learning, robotics, and cyber solutions. This focus is not just about enhancing current capabilities but is also key to future-proofing India's defense infrastructure.
India’s defense budget also champions the innovation ecosystem, with Rs 449.62 crore allocated to the iDEX initiative (Innovations for Defence Excellence). This program actively supports start-ups engaged in developing cutting-edge technologies, highlighting the effort to cultivate domestic talent within the defense sector.
Several acquisitions are on the horizon as part of India’s defense modernization efforts. This includes advanced procurement of equipment for the Indian Coast Guard, which sees its capital budget increased by 43% to support the acquisition of advanced light helicopters, Dornier aircraft, and fast patrol vessels. This welcomed boost will strengthen coastal security and improve operational readiness.
Infrastructure development remains another cornerstone of the budget, with the Border Roads Organisation (BRO) receiving Rs 7,146 crore to bolster strategic infrastructure developments along India's borders. This funding aims to construct roads, tunnels, and bridges, enhancing accessibility and security throughout these regions.
Overall, the Union Budget 2025-26 signals not only significant financial investments but also strategic policy initiatives aimed at ensuring India's defense sector's self-sufficiency and global competitiveness. With ambitious targets for defense production and exports set for 2029, India is positioning itself as a formidable player on the global defense stage.
The allocations reflect the government's dual focus on immediate operational needs and long-term strategic objectives, reinforcing India's commitment to maintaining national security and stability. The new budget lays the foundation for extensive growth within India’s domestic defense manufacturing and highlights the importance of turning vision statements like Atmanirbharta (self-reliance) from mere policy options to actionable realities.