India Defence News : On February 1, 2025, the Union Budget of India allocated a record-breaking Rs 6,81,210.27 crore to the Ministry of Defence (MoD) for the Financial Year (FY) 2025-26, marking a 9.53% increase from the FY 2024-25 Budgetary Estimate (BE). This allocation, the highest among all ministries at 13.45% of the Union Budget, reflects the government's commitment to modernizing the Indian Armed Forces and achieving Prime Minister Narendra Modi’s vision of ‘Viksit Bharat @ 2047’—a developed, self-reliant India by its centennial independence year.
Defence Minister Shri Rajnath Singh hailed the budget as a transformative step, emphasizing its focus on modernization, self-reliance, and the welfare of ex-servicemen.
This article breaks down the key allocations, priorities, and implications of the 2025-26 defence budget, with detailed tables for clarity.
Overview of the Indian Defence Budget
The Rs 6,81,210.27 crore allocation underscores India’s response to a shifting geopolitical landscape and the need for a technologically advanced, combat-ready military. The budget is divided into four major heads:
- Capital Outlay,
- Revenue Expenditure,
- Defence Pensions, and
- Civil Organisations under the MoD.
The Ministry has also declared FY 2025-26 as the ‘Year of Reforms,’ aiming to streamline procurement processes and optimize fund utilization.
| Category | Amount (Rs Crore) | Percentage of Total Budget | Increase from FY 2024-25 BE |
|---|---|---|---|
| Capital Outlay | 1,80,000 | 26.43% | 4.65% |
| Revenue Expenditure | 3,11,732.30 | 45.76% | 10.24% |
| Defence Pensions | 1,60,795 | 23.60% | 13.87% |
| Civil Organisations (MoD) | 28,682.97 | 4.21% | - |
| Total | 6,81,210.27 | 100% | 9.53% |
Table 1: Budget Allocation Breakdown (FY 2025-26)
Capital Outlay: Modernization and Self-Reliance
The Capital Outlay of Rs 1,80,000 crore, a 4.65% increase from FY 2024-25, is a cornerstone of the budget, focusing on modernizing the Armed Forces amid evolving warfare paradigms.
This includes investments in
- state-of-the-art weaponry,
- infrastructure, and
- research and development (R&D)
Key Focus Areas
Capital Acquisition (Modernization Budget): Rs 1,48,722.80 crore is allocated for acquiring advanced technologies like long-endurance remotely piloted aircraft, deck-based aircraft, next-generation submarines, and ships.
R&D and Infrastructure: Rs 31,277.20 crore will fund research projects and infrastructural assets nationwide.
Push for Aatmanirbhar Bharat
Since FY 2020-21, the MoD has prioritized domestic procurement to bolster self-reliance.
For FY 2025-26, Rs 1,11,544.83 crore (75% of the modernization budget) is earmarked for domestic industries, with Rs 27,886.21 crore (25% of the domestic share) specifically allocated for private sector acquisitions.
This strategy not only reduces import dependency but also stimulates economic growth through job creation and GDP enhancement.
| Sub-Category | Amount (Rs Crore) | Percentage of Capital Outlay |
|---|---|---|
| Capital Acquisition | 1,48,722.80 | 82.62% |
| R&D and Infrastructure | 31,277.20 | 17.38% |
| Total Capital Outlay | 1,80,000 | 100% |
Table 2: Capital Outlay Breakdown
Revenue Expenditure: Operational Readiness
Revenue expenditure, at Rs 3,11,732.30 crore (a 10.24% increase), ensures the Armed Forces remain operationally prepared. This head covers salaries, sustenance, and maintenance costs.
Breakdown
- Pay & Allowances: Rs 1,97,317.30 crore supports personnel salaries, with additional needs to be addressed mid-year.
- Non-Salary Expenditure: Rs 1,14,415.50 crore funds rations, fuel, ordnance stores, and equipment maintenance.
Since FY 2022-23, the government has significantly increased funding for operational preparedness, with a 24.25% jump from the current FY’s BE.
This addresses heightened border deployments, extended naval operations, and increased aircraft flying hours.
Defence Research and Development (DRDO)
The DRDO budget has risen by 12.41% to Rs 26,816.82 crore, with Rs 14,923.82 crore allocated for capital expenditure. This increase supports cutting-edge R&D, including collaborations with private entities via the Technology Development Fund, fostering innovation in deep technology and fundamental research.
Innovation and Startups: iDEX Scheme
To promote self-reliance and innovation, Rs 449.62 crore is allocated to the Innovations for Defence Excellence (iDEX) scheme, including the ADITI sub-scheme.
This represents a nearly threefold increase over two years, aimed at engaging startups and private players in defence technology development.
Welfare of Ex-Servicemen
The government continues to prioritize veterans’ welfare, with significant allocations for pensions and healthcare.
Defence Pensions
- Allocation: Rs 1,61,795 crore (13.87% increase).
- Purpose: Supports 34 lakh pensioners, incorporating the third revision of the One Rank One Pension (OROP) scheme, effective from July 2024.
Ex-Servicemen Contributory Health Scheme (ECHS)
- Allocation: Rs 8,317 crore (19.38% increase).
- Objective: Enhances healthcare access for veterans and their families, with additional mid-year funding in FY 2024-25 addressing emergent medical needs.
Strengthening Coastal and Border Security
Indian Coast Guard (ICG)
The ICG receives Rs 9,676.70 crore, a 26.50% increase, with a 43% jump in its Capital Budget to Rs 5,000 crore.
This funds acquisitions like
- Advanced Light Helicopters,
- Dornier Aircraft, and
- Fast Patrol Vessels,
enhancing coastal security and emergency response capabilities.
Border Roads Organisation (BRO)
The BRO’s capital allocation of Rs 7,146.50 crore (9.74% increase) supports strategic infrastructure projects, such as roads and tunnels in Arunachal Pradesh, Jammu & Kashmir, and Rajasthan. Beyond security, these efforts boost local economies by employing 70,000 youths.
| Entity | Total Allocation (Rs Crore) | Capital Budget (Rs Crore) | Increase from FY 2024-25 |
|---|---|---|---|
| Indian Coast Guard | 9,676.70 | 5,000 | 43% (Capital) |
| Border Roads Org. | - | 7,146.50 | 9.74% |
Table 3: Coastal and Border Security Allocations
Strategic and Economic Implications
Defence Minister Shri Rajnath Singh emphasized that the budget aligns with inclusive development, benefiting youth, farmers, women, and the middle class.
The focus on domestic manufacturing and capital investments is expected to have a multiplier effect, enhancing GDP and employment opportunities.
The emphasis on emerging domains like cyber, space, AI, and robotics positions India to tackle modern security challenges effectively.
Conclusion
The India Defence Budget for FY 2025-26, with its record Rs 6,81,210.27 crore allocation, balances modernization, self-reliance, and welfare. By prioritizing
- domestic procurement,
- technological innovation, and
- infrastructure development,
it lays a robust foundation for a future-ready military and a prosperous economy.
As the MoD launches its ‘Year of Reforms,’ this budget underscores India’s determination to establish itself as a global defence powerhouse by 2047.
SOURCE : pib.gov.in