Defence Budget 2026-27 Records Sharpest Jump in Five Years, Crosses ₹7.8 Lakh Crore

New Delhi: India’s defence budget for 2026-27 hits a record ₹7.85 lakh crore, up 15.19% from last year. This marks the steepest annual rise in at least five years, government data shows.

The increase signals a sharper focus on military modernisation, capital acquisitions, and domestic defence manufacturing, amid evolving regional security dynamics.

How Defence Spending Has Grown Over the Years

India’s defence budget has steadily expanded since FY 2021-22, but the latest hike stands out for its scale.

Financial Year Defence Allocation

2021-22 ₹4.78 lakh crore

2022-23 ₹5.25 lakh crore

2023-24 ₹5.94 lakh crore

2024-25 ₹6.22 lakh crore

2025-26 ₹6.81 lakh crore

2026-27 ₹7.85 lakh crore

While earlier budgets recorded incremental increases, the 2026-27 allocation reflects a clear acceleration in defence spending.

Capital Expenditure Sees Major Push

A key feature of the latest budget is the record capital outlay of ₹2.19 lakh crore, aimed at funding new platforms, equipment, and advanced defence systems.

Of this, ₹1.85 lakh crore has been earmarked specifically for capital acquisition, indicating a strong shift towards modernisation rather than routine expenditure.

Capital outlay stood at around ₹1.80 lakh crore in FY 2024-25 and ₹1.92 lakh crore in FY 2025-26, underlining the sharper rise this year.

The government has reserved ₹1.39 lakh crore of the capital allocation for procurement from domestic defence manufacturers, including private sector firms.

Spending on veteran healthcare has also been raised, with the Ex-Servicemen Contributory Health Scheme (ECHS) receiving ₹12,100 crore, a significant increase over the previous year.

Additionally, allocations for the Border Roads Organisation (BRO) have been enhanced to speed up construction of roads, tunnels, bridges, and airstrips in strategically important border areas.

Defence Spending and GDP

Despite the record allocation, India’s defence expenditure continues to remain around 2% of GDP, a level that has been broadly consistent over recent years.

Experts note that while absolute spending has increased sharply, the effectiveness of fund utilisation and timely acquisition will remain key areas to watch.