The Union Budget 2025-26 has earmarked a record Rs 6.81 lakh crore for the Ministry of Defence (MoD), marking a 9.53% increase from the current financial year. This allocation accounts for 13.45% of the total Union Budget, the highest among all ministries.
Out of the total budget, Rs 1.80 lakh crore (26.43%) has been set aside for capital outlay, aimed at modernising the armed forces with state-of-the-art weapons and infrastructure. The revenue head, which covers operational and sustenance costs, has received Rs 3.11 lakh crore (45.76%). Additionally, Rs 1.61 lakh crore (23.60%) has been allocated for defence pensions, while Rs 28,682.97 crore (4.21%) has been assigned to MoD’s civil organisations.

The MoD has declared 2025-26 as the ‘Year of Reforms’ to streamline defence procurement processes and ensure optimal utilisation of funds.
To strengthen self-reliance in defence manufacturing, Rs 1.12 lakh crore has been earmarked for procurement from domestic industries. Within this, Rs 27,886.21 crore is dedicated to acquisitions from private domestic firms. This initiative aligns with the government’s push for ‘Aatmanirbhar Bharat’ in defence.
The allocation will fund key acquisitions, including high-altitude long-endurance drones, next-generation submarines, deck-based aircraft, and advanced combat platforms. Moreover, emerging technologies like Artificial Intelligence (AI), machine learning, and robotics will receive greater investment.
To ensure operational preparedness, Rs 3.11 lakh crore has been allocated for revenue expenditure, marking a 10.24% increase from the previous budget. A significant portion, Rs 1.14 lakh crore, will cover essential procurements such as fuel, ordnance, and maintenance. The salary head for defence personnel stands at Rs 1.97 lakh crore.
In response to growing security challenges, additional funds will support deployments in border areas, extended sea patrols, and increased flying hours for aircraft.
The Defence Research and Development Organisation (DRDO) has received Rs 26,816.82 crore, reflecting a 12.41% hike. Of this, Rs 14,923.82 crore is allocated for capital expenditure and R&D projects, strongly emphasising collaboration with private firms under schemes like the Technology Development Fund.
To foster innovation in the defence sector, Rs 449.62 crore has been allocated to the iDEX scheme, nearly tripling in size over two years. The scheme will fund defence start-ups and private sector R&D through initiatives such as Acing Development of Innovative Technologies with iDEX (ADITI).
The Ex-Servicemen Contributory Health Scheme (ECHS) has been allotted Rs 8,317 crore, marking a 19.38% increase. The government has also increased defence pensions by 13.87% to Rs 1.61 lakh crore, incorporating the latest revision under One Rank One Pension (OROP).
The Indian Coast Guard (ICG) has received a substantial budget boost, with its capital allocation rising by 43% to Rs 5,000 crore. This will facilitate the acquisition of Advanced Light Helicopters (ALH), Dornier aircraft, fast patrol vessels, training ships, and interceptor boats.
The Border Roads Organisation (BRO) has been granted Rs 7,146.50 crore, up 9.74% from the previous year. These funds will support the construction of tunnels, bridges, and strategic roads, enhancing connectivity in border regions like Arunachal Pradesh, Jammu & Kashmir, and Rajasthan.
Defence Minister Rajnath Singh hailed the budget as a crucial step toward achieving Prime Minister Narendra Modi’s vision of ‘Viksit Bharat @ 2047.’ He emphasised that the increased allocation would modernise the armed forces and generate employment and boost India’s GDP through greater investment in defence manufacturing.
The Union Budget 2025-26 signals a robust push for self-reliance in defence, technological advancement, and improved operational readiness, ensuring India’s security apparatus remains future-ready.