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Defence Budget 2026–27: Record ₹7.85 Lakh Crore Outlay

5 February 20261 min read
DEFENCE & SECURITYDefence Budget2026–27: Record₹7.85 Lakh CroreOutlay5 February 2026safalsetu.com

Why in the news

Finance Minister Nirmala Sitharaman presented India’s biggest-ever defence allocation in the Union Budget 2026–27, paired with steps to build home-grown defence manufacturing under Aatmanirbhar Bharat.

Key facts

  • Total outlay ₹7.85 lakh crore, a 15.19% rise.
  • Defence share of Union expenditure: 14.67%.
  • Aims: modernise forces, cut import dependence, back strategic infrastructure, improve personnel welfare.
ComponentAmountRemark
Capital expenditure₹2.19 lakh croreUp about 22%
Capital acquisitions₹1.85 lakh croreUp about 24%
Domestic procurement₹1.39 lakh croreRoughly 75% of acquisitions

Indigenisation and strategic measures

  • Aviation and MRO: basic customs duty waived on engines and parts for civil and trainer aircraft, and on raw materials Defence PSUs use for maintenance, repair and overhaul.
  • CIE scheme: new scheme for construction and infrastructure equipment, including tunnel-boring machines.
  • Nuclear power: import-duty relief extended to 2035 and now covers every nuclear plant.
  • Critical minerals: no basic customs duty on capital goods for processing them.
  • Rare Earth Corridors: Odisha, Kerala, Andhra Pradesh, Tamil Nadu; rare earth magnets serve radars, precision munitions, drones and communication systems.

Personnel welfare

Service and disability elements of pension are fully tax-exempt for armed forces and paramilitary personnel invalided out because of service-linked disability.

Exam angle

  • Share of defence in Union expenditure: 14.67%.
  • Nuclear duty exemption runs till 2035.
  • Corridor states: Odisha, Kerala, Andhra Pradesh, Tamil Nadu.

Test yourself

1. In the Union Budget 2026–27 defence outlay of ₹7.85 lakh crore, what share of Union expenditure does defence hold?

Notes state defence holds 14.67%, the highest among all Ministries.

2. Under the 2026–27 defence budget notes, customs-duty relief for nuclear power project imports was extended up to which year?

The exemption was extended till 2035 and covers all nuclear plants.

3. Which set of States was named for Rare Earth Corridors in Budget 2026–27?

Four corridors: Odisha, Kerala, Andhra Pradesh and Tamil Nadu.