NEW DELHI: The Union Budget 2026 has set aside Rs 7.85 lakh crore for defence, marking a sharp increase from Rs 6.81 lakh crore last year. According to official figures, the defence outlay for 2026-27 stands at Rs 7,84,678 crore, compared with Rs 6,81,210 crore in the previous financial year.

Of this, the capital outlay has been pegged at Rs 2,19,306 crore, while revenue expenditure stands at Rs 5,53,668 crore, including Rs 1,71,338 crore for pensions.The armed forces will receive Rs 2.19 lakh crore for modernisation, with allocations including Rs 63,733 crore for aircraft and aero engines and Rs 25,023 crore for the naval fleet.The defence ministry has several major projects in the pipeline, including contracts for Rafale fighter jets, submarines and unmanned aerial vehicles.In comparison, the capital outlay in 2025-26 was pegged at Rs 1,80,000 crore, which was later raised to Rs 1,86,454 crore at the revised estimate stage.In her budget speech, 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 the waiver of basic customs duty on raw materials imported for the manufacture of aircraft parts used for maintenance, repair or overhaul by defence sector units. The measures are expected to provide a boost to the defence aerospace industry.Meanwhile, the Defence Services (Revenue) and Capital Outlay were allocated Rs 3,65,478.98 crore and Rs 2,19,306.47 crore, respectively, reflecting jumps of 17.24 per cent and 21.84 per cent.In a boost to the defence sector, Sitharaman announced, “It is proposed to exempt basic customs duty on raw materials imported for the manufacture of parts of aircraft to be used in maintenance, repair or overall requirements by units in the defence sector.”