The Union Budget has made an allocation of Rs 681,210.27 crore for Financial Year (FY) 2025-26 for the Ministry of Defence (MoD). This allocation is 9.53% more than the budgetary estimate of FY 2024-25 and stands at 13.45% of the union budget, which is the highest among the ministries.
In the fulfilment of Prime Minister Narendra Modi-led Government’s commitment of ‘Viksit Bharat @ 2047’ with technologically advanced and self-reliant armed forces.
The Ministry has taken a decision to commence 2025-26 as the Year of Reforms,’ which will further bolster the commitment of the government to modernisation of the armed forces and is aimed at simplification in the defence procurement procedure to ensure optimum utilisation of the allocation.
Addressing the media, Defence Minister Rajnath Singh congratulated Finance Minister Nirmala Sitharaman for presenting a budget towards fulfilling the Prime Minister’s resolve of Viksit Bharat.
He said, This budget will encourage the development of youth, poor farmers, women, and all other sections of society. Recognising the contribution of the middle class, the budget has brought an unprecedented gift.”
Capital Outlay
In the current geopolitical scenario where the world is witnessing a changing paradigm of modern warfare, Indian Armed Forces need to be equipped with advanced weaponry and have to be transformed into a technologically-advanced combat-ready force. Keeping this in view, Rs 1,80,000 crore has been allocated on Capital Outlay of the Defence Forces. This allocation is 4.65% higher than the Budgetary Estimate (BE) of FY 2024-25.
Out of this, Rs 1,48,722.80 crore is planned to be spent on Capital Acquisition, and the remaining Rs 31,277.20 crore is for capital expenditure on Research & Development and creation of infrastructural assets across the country.
This allocation will take care of major acquisitions planned in the upcoming financial year and foster jointness & integration initiatives. This allocation of funds will further facilitate MoD’s plan to venture in new domains such as Cyber & Space and emerging technologies such as Artificial Intelligence (AI), Machine Learning and Robotics etc.
Operational and sustenance budget of Armed Forces
Revenue expenditure is to take care of Pay & Allowances of the Armed Forces Personnel and for sustenance & operational preparedness, Rs 3,11,732.30 crore has been allocated for this purpose which is 10.24% higher than budgetary allocation of FY 2024-25.
Out of this, Rs 1,14,415.50 crore has been allocated on account of non-salary expenditure which will facilitate procurement of Ration, Fuel, Ordnance Stores and maintenance/repair of equipment etc.
This allocation will address the requirement due to additional deployment of the forces in the border areas, hiring of vessels, increase in expenditure on longer sea deployment of ships and increase in flying hours for the aircraft.
Under the Salary Head of revenue expenditure, Rs 1,97,317.30 crore has been allocated to take care of Pay & Allowances of the three services and any further requirement will be addressed during mid-year review.
Enhanced Allocation for DRDO
The budgetary allocation to Defence Research and Development Organisation (DRDO) has been increased to Rs 26,816.82 crore in FY 2025-26 which is 12.41% higher than 2024-25.
Out of this, a major share of Rs 14,923.82 crore has been allocated for capital expenditure and to fund the R&D projects.
Encouraging Start-up Ecosystem for Innovation in Defence
For making the Armed Forces self-reliant in defence technology and encouraging innovation, it is essential to be involved with private players and strengthen the start-up ecosystem in the country for technological development and innovation in the defence sector.
For this purpose, Rs 449.62 crore has been allocated to iDEX scheme, including its sub scheme Acing Development of Innovative Technologies with iDEX (ADITI) to be utilised for funding the projects to be taken up under this scheme.
Govt’s resolve for ex-servicemen welfare
The Government has maintained the constant higher allocation for providing best healthcare facilities to the esteemed veterans and their families through dedicated Ex-Servicemen Contributory Health Scheme (ECHS). In the ensuing FY, Rs 8,317 crore has been allocated towards ECHS which is 19.38% higher than BE of FY 2024-25.
There are approximately 34 lakh defence pensioners whose monthly pension is met out of Defence Pension Budget.
Capital Budget of Indian Coast Guard
Indian Coast Guard (ICG) has been allotted Rs 9,676.70 crore under Capital and Revenue Head which is 26.50% more than the allocation for FY 2024-25.
A jump of 43% in Capital Budget i.e Rs 5,000 crore for FY 2025-26 will provide adequate financial space for acquisition of Advanced Light Helicopters (ALH), Dornier Aircraft, Fast Patrol Vessels (FPVs), Training Ships, Interceptor Boats etc.
On revenue head, Rs 4,676.70 crore for FY 2025-26 has been allotted which shows an increase of 12.64% from FY 2024-25 . The increase will be utilised to fund the expenditure to be incurred on additional deployments of manpower and resources in addition to addressing the inflation.
Strengthening border infrastructure
In order to further improve the border infrastructure and facilitate the movement of armed forces personnel through tough terrains, Rs 7,146.50 crore has been allocated to the Border Roads Organisation (BRO) under the capital head, which is 9.74% higher than the BE of 2024-25.
The financial provision made for FY 2025-26 for BRO will not only promote the strategic interest of the nation in border areas by constructing tunnels, bridges, and roads, but will also boost socio-economic development, provide job opportunities, and foster tourism.
