Union Budget 2026: Defence expenditure to increase by 15% at Rs 7.84 lakh crore post Op Sindoor

Following major rise in tension with Pakistan last year, the government on Sunday announced Rs 7.84 lakh crore as defence outlay for 2026-27, an increase of about 15 per cent from last year's Rs 6.81 lakh crore, in Union Budget 2026.

The total capital outlay for the sector has been pegged at Rs 2.19 lakh crore, while the revenue expenditure has been put at Rs 5.53 lakh crore, which includes Rs 1.71 lakh crore for pensions.

The government has aimed to strengthen Air Force capacity with an outlay of Rs 63,733 crore for aircraft and aero engines while Rs 25,023 crore is allocated for the naval fleet.

Further, Finance Minister Nirmala Sitharaman proposed exempting basic customs duty on components and parts required for the manufacture of civilian, training and other aircraft.

She also announced to waive basic customs duty on raw materials imported for manufacture of parts of aircraft to be used in maintenance, repair, or overhaul requirements by units in the defence sector.

In the previous budget, Sitharaman had announced the allocation of Rs 6.81 lakh crore for defence. The capital outlay was pegged at Rs 1.80 lakh crore which increased to Rs 1.86 lakh crore at revised estimate stage.