Defence spending climbs to ₹7.85 lakh crore, capex surges
Government hikes defence spending 15%, raises capital outlay 20% to ₹2.31 lakh crore, prioritising modernisation, quicker procurement and indigenisation to strengthen long-term military capabilities.
India has significantly increased its defence spending in the Union Budget 2027, reflecting the government’s continued focus on modernisation and long-term military preparedness. Finance Minister Nirmala Sitharaman announced a defence outlay of ₹7.85 lakh crore, a 15.2% increase from the ₹6.81 lakh crore allocated in the FY26 budget. A major part of this rise is in capital expenditure, which has been increased by 20.1% to ₹2.31 lakh crore, highlighting the government’s commitment to strengthening capabilities, modernising forces, and boosting indigenous defence production.
The budgetary increase comes at a time when India is balancing its security needs against broader fiscal priorities. Rising regional tensions, evolving geopolitical challenges, and the need to maintain a credible deterrence posture have all underscored the importance of sustained investment in defence. At the same time, the government is placing a strong emphasis on self-reliance in defence manufacturing, aiming to reduce import dependence and build domestic capability in cutting-edge technologies and weapon systems.
Within the defence budget, the modernisation segment has been given a substantial boost of 24%, reflecting a clear intent to upgrade platforms, weapons, and technological infrastructure. This includes investments in next-generation aircraft, naval vessels, missile systems, and communication networks, ensuring that the armed forces remain equipped to meet both conventional and emerging security challenges. Faster procurement processes and indigenisation drives are expected to further enhance operational readiness while also supporting domestic defence industries.
India’s defence expenditure has seen steady growth over the past five years, averaging around 9.2% annual increase since the 2020 Budget. This consistent rise in funding underscores the government’s recognition of defence as a strategic priority, while also signalling confidence in the country’s ability to manage fiscal constraints responsibly.
Capital expenditure (capex) continues to be a central focus, reflecting the understanding that long-term capability building depends heavily on investment in modern equipment, research and development, and domestic manufacturing facilities. By allocating a larger share of the overall defence budget to capex, the government aims to accelerate the modernisation drive and support initiatives like Make in India in the defence sector.
Overall, the Union Budget 2027 marks a clear strategic choice: India is not only maintaining its security preparedness but also reshaping its defence ecosystem for greater self-reliance, technological sophistication, and future-readiness. The combination of enhanced capital outlay, faster procurement, and indigenisation efforts signals a long-term vision to equip the armed forces with modern, homegrown capabilities while simultaneously strengthening domestic defence industries.
This approach is expected to have lasting benefits for national security, operational effectiveness, and economic growth, as India positions itself to meet both current and future defence challenges with confidence and resilience.