Short Description:
As Nirmala Sitharaman prepares Budget 2026, India’s steady defence spending rise highlights a strategic pivot toward modern tech, domestic manufacturing, and global exports.
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Main Article:
Finance Minister Nirmala Sitharaman’s upcoming Union Budget 2026 is poised to sustain India’s significant focus on defence spending, a trend clearly mapped over the past five years. Amid persistent geopolitical uncertainty and border security concerns, the defence budget has climbed from ₹4.85 lakh crore in FY21 to a projected ₹6.81 lakh crore for FY26—a near ₹2 lakh crore increase, underscoring national security as a non-negotiable fiscal priority. This consistent upward trajectory signals the government’s commitment to military preparedness, with sharper rises in recent years reflecting recalibrated security calculations in a volatile world.
Beyond the headline numbers, the capital expenditure allocation reveals a crucial qualitative shift. For FY25, about 26% of the total outlay was earmarked for modernization, heavily skewed toward domestic procurement under the Atmanirbhar Bharat (Self-Reliant India) initiative. Industry groups like FICCI advocate raising this capital outlay share to 30%, arguing future warfare is “technology-driven, multi-domain and information-centric.” Consequently, Budget 2026 is expected to focus on strategic investments in AI-enabled systems, unmanned aerial vehicles (UAVs), cyber capabilities, and space tech, moving beyond traditional platform purchases to build a next-gen defense ecosystem.
A critical measure of success for this spending will be India’s growing defence exports. Having achieved a remarkable 46% compound annual growth rate between 2016-17 and 2023-24—driven significantly by private sector innovation—India has set an ambitious export target of ₹50,000 crore by 2028-29. Budget 2026 will be scrutinized for its policies and allocations supporting research & development (R&D), with calls for a significant boost to DRDO funding, and incentives that transform rising domestic spending into global market competitiveness. The ultimate question is whether sustained budget increases can catalyze a robust cycle of indigenous innovation, production, and export, securing India’s strategic and economic interests simultaneously.
Short Summary:
Budget 2026 is set to continue India’s rising defence spending, with a strategic focus shifting from sheer budget size to modernization, domestic manufacturing under Atmanirbhar Bharat, and boosting defence exports. The allocation will likely emphasize capital expenditure on advanced technologies like AI and UAVs, aiming to translate fiscal commitment into long-term strategic autonomy and a stronger position in the global defence market.
