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Defence Budget Soars to ₹7.8 Lakh Crore with Focus on Modernisation

The Union Budget for 2026-27 has allocated ₹7.8 lakh crore to the Defence Ministry, marking a significant 15 percent overall increase. The capital outlay for defence modernisation sees a sharp 21.84 percent rise to ₹2.19 lakh crore, funding major projects like Rafale fighter jets and submarines. Finance Minister Nirmala Sitharaman announced key customs duty exemptions for raw materials used in aircraft maintenance and for manufacturing lithium-ion cells. The budget also includes measures to support the seafood export industry impacted by US tariffs.

Key Points: Defence Budget 2026: ₹7.8 Lakh Crore Allocated, Capital Outlay Up 22%

  • 15% overall hike in defence budget
  • 22% increase in capital outlay for modernisation
  • Customs duty exemptions for defence & battery sectors
  • Boost for seafood exports amid US tariffs
2 min read

Union Budget 2026: Centre allocates Rs 7.8 lakh cr to Defence Ministry

Union Budget 2026 allocates ₹7.8 lakh crore to Defence, with a 22% hike in capital outlay for modernisation projects like Rafale jets and submarines.

"It is proposed to exempt basic customs duty on raw materials imported for the manufacture of parts of aircraft... - Nirmala Sitharaman"

New Delhi, February 1

The Centre allocated a budget of Rs 7.8 lakh crore to the Defence Ministry for the year 2026-27. Defence forces will receive Rs 2.19 lakh crore for modernisation under the Capital Outlay budget.

Overall, the defence ministry will see a 15 percent increase in its budgetary allotment. In FY26-27, there is a 21.84 percent increase in capital outlay hiked from Rs 1.80 lakh crore in FY 25-25 to Rs 2.19 lakh crore.

The Defence Ministry has major projects in the pipeline, such as contracts for Rafale fighter jets, submarines, and unmanned aerial vehicles.

The Defence budget (civil) has been reduced by 0.45 per cent as compared to last year's Rs 28,554.61 crore.

Meanwhile, the Defence Services (Revenue) and Capital Outlay were allocated Rs 3,65,478.98 crore and Rs 2,19,306.47 crore, respectively, reflecting jumps of 17.24 per cent and 21.84 per cent.

The allocation for Defence Pensions also saw a rise, with the Centre allotting Rs 1,71,338.22 crore.

In a boost to the defence sector, Union Finance Minister Nirmala Sitharaman announced, "It is proposed to exempt basic customs duty on raw materials imported for the manufacture of parts of aircraft to be used in maintenance, repair or overall requirements by units in the defence sector."

Meanwhile, in response to the US tariffs, FM Nirmala Sitharaman proposed reducing the tariff rate on all dutiable goods imported for personal use from 20 per cent to 10 per cent.

In line with the government's aim to promote exports and lift the seafood industry hit by US tariffs, FM Sitharaman propose to increase the limit for duty-free imports of specified inputs used for processing seafood for export from the current one per cent to three per cent of the FOB value of the previous year's export turnover.

Union FM Nirmala Sitharaman said, "I propose to increase the limit for duty-free imports of specified inputs used for processing sea foods for export from the current one per cent to three per cent of the FOB value of the previous year's export turnover. I also propose to allow duty-free imports of specified inputs, which is currently available for exports of leather or synthetic footwear to exports of shoe uppers as well."

The Finance Minister proposed a basic customs duty exemption to capital goods used for manufacturing lithium-ion cells for batteries and critical minerals.

FM Sitharaman presented the Union Budget for the record ninth time.

- ANI

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Reader Comments

P
Priya S
While defence is important, I hope this massive allocation doesn't come at the cost of healthcare and education budgets. The reduction in the civil defence budget, even if small, is a bit concerning. Need a balanced approach.
R
Rohit P
Good move on the customs duty exemptions for defence manufacturing and lithium-ion cells! This will boost 'Make in India' and reduce our dependency on imports. Atmanirbhar Bharat in action. 👏
S
Sarah B
The focus on helping the seafood industry with the duty-free import limit increase is a smart, targeted response to the US tariffs. Protecting export-oriented sectors is crucial for jobs and the economy.
V
Vikram M
Rs 7.8 lakh crore is a huge number. As a taxpayer, I just hope there is transparency and efficiency in how this money is spent. We've heard about corruption in defence deals before. The focus should be on getting value for every rupee.
K
Karthik V
The increase in defence pensions is a respectful gesture towards our veterans. They have served the nation and deserve proper support. Salute to our armed forces, past and present.

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