Defence Budget 2026–27: Record ₹7.85 Lakh Crore Outlay
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.
| Component | Amount | Remark |
|---|---|---|
| Capital expenditure | ₹2.19 lakh crore | Up about 22% |
| Capital acquisitions | ₹1.85 lakh crore | Up about 24% |
| Domestic procurement | ₹1.39 lakh crore | Roughly 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.