India Likely To Step Up FY26 Defence Capital Budget By Around Rs 45,000 Crore To Fund Big-Ticket Military Projects: Report

The government is likely to make an additional fund allocation for the defence sector during FY26, with an estimated Rs 40,000–45,000 crore to be added to the capital budget, ET Now reported, citing government sources.

The fresh capital is expected to fund big-ticket defence projects and accelerate procurement of high-end military equipment to meet operational needs.

According to the ET Now report, the Defence Ministry has submitted a proposal to the Finance Ministry after reviewing its capital expenditure.

The report, citing government sources, said that domestic procurement is projected to surpass Rs 1.12 lakh crore in FY26.

Further, procurement of high-end defence equipment to be expedited to meet operational needs.

The additional allocation will likely be routed through supplementary demands for grants in the upcoming Winter Session of Parliament.

The Union Budget FY26 had earlier earmarked Rs 6.81 lakh crore for the Ministry of Defence, including Rs 1.80 lakh crore under capital heads.

The new infusion will push overall defence spending significantly higher, reinforcing India’s push for defence modernisation and indigenisation.

This comes as the government remains focused on meeting strategic and operational needs, with special emphasis on domestic manufacturing under the Atmanirbhar Bharat initiative.

Defence Minister Rajnath Singh had earlier this month announced that India procured military hardware worth Rs 1. 20 lakh crore from domestic sources by the end of FY2024-25, up from Rs 74,000 crore in 2021-22.

The rapid scaling represents a fundamental shift in procurement strategy, prioritising indigenous manufacturers over foreign suppliers.

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