New Delhi (Agencies): India’s Ministry of Defence (MoD) has announced a significant increase in its 2025–26 defence budget, raising it by 9.5% to INR6.81 trillion (USD78.4 billion). The announcement was made on 1 February.
According to the MoD, the new budget accounts for approximately 13.5% of the total annual government expenditure, reflecting a nominal rise (before inflation) over the previous year’s budget.
The largest portion of the new defence budget will be allocated to the armed forces, receiving INR3.1 trillion, which constitutes 46% of the total allocation. Capital outlay for defence services, including acquisitions and research and development (R&D), will receive INR1.8 trillion (26%), while defence pensions will be allocated INR1.6 trillion (24%). The remaining 4% is designated for civil organisations under the MoD.
Comparing the allocations to the previous year, the armed forces allocation for 2025–26 has increased by about 10%, capital outlay for defence services has risen by nearly 5%, and defence pensions have seen an increase of about 13%.
Out of the 2025–26 capital outlay expenditure, approximately INR1.49 trillion is earmarked for capital acquisitions, referred to by the MoD as the modernisation budget. The remaining INR313 billion is intended for R&D and the creation of infrastructural assets across the country.
The MoD highlighted that 75% of the modernisation budget, or about INR1.11 trillion, will be spent on procurement through domestic sources, with the remaining 25% allocated for procurements exclusively from local private-sector companies.
Commenting on the modernisation budget, the MoD stated that the funds will support its plans to enhance military jointness and integration, as well as develop new military technologies, including cyber, space, artificial intelligence, and robotics.