{"id":2048,"date":"2026-02-13T12:17:16","date_gmt":"2026-02-13T06:47:16","guid":{"rendered":"https:\/\/www.samdesindia.in\/blog\/?p=2048"},"modified":"2026-02-14T08:10:10","modified_gmt":"2026-02-14T02:40:10","slug":"in-depth-analysis-of-the-defence-budget-2026-27","status":"publish","type":"post","link":"https:\/\/www.samdesindia.in\/blog\/in-depth-analysis-of-the-defence-budget-2026-27\/","title":{"rendered":"In Depth Analysis of the Defence Budget 2026-27"},"content":{"rendered":"\n

Ms Shobhana Joshi, Co-Chairperson SAMDeS<\/strong><\/p>\n\n\n\n

The allocation for the first Union Budget for Defence after Operation Sindoor<\/em><\/strong> received an increase of 15.19 per cent over Budgetary Estimates (BE) 2025\u201326, and places national security at the core of India\u2019s modernisation, self-reliance and innovation priorities. The allocation is  Rs. 7,84,678 crores asagainst the Budget Estimates of Rs. 6,81,210 crores in 2025-26. The increase over the Revised Estimates  2025-26  of Rs. 7,32,512 crore however, is about 7.12 per cent . The total allocation is 14.67  per cent of the Budget Estimates of the Union of India. As a percentage of GDP, the 2026-27 defence budget is  now touching 2 per cent   as against 1.91 per cent  in 2025-26.<\/p>\n\n\n\n

<\/p>\n\n\n\n

\u00a0The budget attempts to balance manpower, sustenance, operations and\u00a0 force modernisation, but still almost 50 per cent \u00a0of the budget constitutes pay and pension expenditure.\u00a0 While manpower costs on pay and pensions constitute 48.24 per cent, capital acquisitions,\u00a0 sustenance and operations account for 48.12 per cent. Out of the total allocation made to the Ministry of Defence, 27.95 per cent \u00a0of the Defence Budget allocation is for capital expenditure, 20.17 per cent \u00a0for revenue expenditure on sustenance and operational preparedness, 26.40 per cent \u00a0for revenue expenditure on pay and allowances, 21.84 per cent \u00a0for defence pensions, and 3.64 per cent \u00a0for civil organisations.<\/p>\n\n\n\n

\"\"
Table 1: Overview of the Defence Budget 2026-27<\/figcaption><\/figure>\n\n\n\n

Allocations for Defence Services 2026-27<\/strong><\/p>\n\n\n\n

       The allocation for the Defence Services (Demand numbers 20 and 21) is 19  per cent  more than BE 2025-26 and 9.05  per cent  more than RE 2025-26. The  trends in  Revenue Capital breakup from  BE and RE  2023-24  are shown  below : (Values in crore).It is pertinent to note that there has been the  highest allocation of funds at revised estimate stage in 2025-26 as compared to financial years  2023-24 and 2025-26. Also, for the first time revenue expenditure received substantial additional funds of Rs. 38,038 crores.     <\/p>\n\n\n\n

\"\"
Table 2: Trend Analysis<\/figcaption><\/figure>\n\n\n\n

Capital Outlay on Defence Services –  2026-27<\/strong><\/p>\n\n\n\n

       Under capital outlay on Defence Services, as against the allocation of Rs. 2,19,306.47 crore,  the armed forces received an allocation of   Rs 1,98,792.36  crore. The balance of the capital allocation is for Research & Development, DGQA and the newly created DPSUs. The allocation for \u2018Capital (Acquisition)\u2019 is Rs.1,79,299.17 crore and for \u2018Capital (Other than Acquisition)\u2019 is Rs. 19,393.19 crore.  <\/p>\n\n\n\n

Budget Utilization 2025-26<\/strong><\/p>\n\n\n\n

  A comparison of the BE and RE 2025-26 shows that against a BE 2025-26 of Rs.1,61,528.02 crore the RE 2025-26 was Rs. 1,67,7792.38 crore, an increase Rs. 6,247.43 crore.<\/p>\n\n\n\n

\"\"
Table 3: Capital Budget <\/figcaption><\/figure>\n\n\n\n

The break-up  of allocations between capital and other than capital acquisition and its utilization from  BE to  RE stage in 2025-26  are shown in the table  below. In  Capital (Acquisition), there was an overall excess expenditure, however the expenditure across various heads has been uneven. The main heavy expenditure has been incurred in the head  \u2018Aircraft and aero engines\u2019 with  an excess expenditure of Rs 24,166.09 crore over the BE allocation. This was offset by a  sizeable amount of slippage from the allotted budget in  \u2018Other Equipment\u2019  of Rs.  Rs.12,338.57. As the head \u2018Other Equipment\u2019  is very generic it is difficult to assess from the budget documents where exactly the slippages have taken place.  \u2018Naval Fleet\u2019 had a slippage  of Rs. 2994.14 crore, and Joint Staff had a slippage of Rs. 636.66crore.    In Capital (Other than Acquisition) there was a slippage of Rs. 1900.04 crore under the heads of Land, Construction Works and Special Projects.<\/p>\n\n\n\n

\"\"
Table 4: Capital (Other than Acquisition) Budget<\/figcaption><\/figure>\n\n\n\n

  There was  an additional  allocation of funds  at RE stage  in the following heads; <\/p>\n\n\n\n

  • Rs. 24,166.09  crore in  \u2018Aircraft &Aeroengines\u2019,<\/li>
  • Rs.        45.94  crore in \u2018 Heavy & Medium Vehicles\u2019  <\/li>
  • Rs.        72.00  crore  in \u2018Rashtriya Rifles\u2019<\/li><\/ul>\n\n\n\n

    . Defence Services (Revenue)  <\/strong><\/p>\n\n\n\n

       Rs 3,65,478.98 crore has been allocated for Defence Services (Revenue) against an allocation  of 3,11,732.30 in BE 2025-26, which is an increase of 17.24 per cent . However, a major step up took place at RE 2025-26 stage and the allocation increased  to Rs. 3,49,770.06 crore, which is 12.20 per cent .  The break- up of allocations is as follows (Value Rs in crore):<\/p>\n\n\n\n

    \"\"
    Table 5: Revenue Budget Trends<\/figcaption><\/figure>\n\n\n\n

    Operational Expenditure<\/strong><\/p>\n\n\n\n

    Another major change introduced in the budget documents 2026-27, is to classify    the operational  expenditure  of the three services and R&D separately. Previously the  Revenue budget of the three services was categorized as \u2018Establishment expenditure of the centre\u2019. Now a separate category  \u2018Other Central sector expenditure\u2019   has been introduced from RE 2025-26 which has  mapped the line items of \u2018Transportation\u2019, \u2018Stores\u2019, \u2018Works\u2019, \u2018Repairs &Refits\u2019 as operational expenditure. In addition, Spectrum charges paid to Department of Telecommunication have also been included. This step will bring visibility regarding operational expenditure incurred during the year. Consequently,  in  RE 2025-2026  the allocation for \u2018Other Central Sector Expenditure\u2018 was Rs. 1,37,579.30 crore which is 39.99 per cent   of the total revenue allocation. The allocation in BE 2026-27 is Rs. 1,38,215.04 crore. The  details of the three services  are given in the table below:<\/p>\n\n\n\n

    \"\"
    Table 6: Operational Expenditure<\/figcaption><\/figure>\n\n\n\n

    Continued Focus on Indigenous Capacity<\/strong><\/p>\n\n\n\n

    The budget continues with the focus on building up indigenous production of weapons and systems and strengthen the domestic industries. Accordingly, a substantial share of the modernisation budget  has been earmarked for the capital procurement from domestic industries. In order to encourage the private sector for manufacturing and technological development in the defence sector, a notable percentage of domestic share is further earmarked for acquisition from domestic private industries.<\/p>\n\n\n\n

    As per PIB press release the following provisions have been made in the budget to give a fillip to the domestic defence  industry:<\/p>\n\n\n\n

    • \u20b91.39 lakh crore allocated for procurement from domestic defence industries.<\/li>
    • Around 75 per cent  of the Capital Acquisition budget is reserved for domestic defence industries in FY 2026-27<\/li>
    • Basic custom 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 to be exempted.<\/li><\/ul>\n\n\n\n

      Defence Research & Development <\/strong><\/strong><\/p>\n\n\n\n

         <\/strong>The budgetary allocation to the  Defence Research and Development Organisation (DRDO) has been increased to Rs.29,100.25 crore in   BE 2026-27 from Rs. 26,816.82 crore in BE 2025-26. Out of this allocation, a major share of Rs. 17,250.25 crore has been  allocated for capital expenditure.<\/p>\n\n\n\n

      Conclusion<\/strong><\/p>\n\n\n\n

        <\/strong>The 15.19  per cent  increase in theDefence Budget 2026-27  has received a positive response. The hike under the capital head shows serious intent to modernise the defence capability. But at the same time gaps in the  utilisation of the higher allocations and an even expenditure pattern, remains  a cause for concern. Industry will also need  to keep pace  in their production capacity for  ensuring that  the  higher allocations for acquisition of weapon systems are spent  in an equitable and balanced manner. The introduction of a separate category for operational expenditure in the revenue head is also a correct  step. Maintenance and sustainment  of weapons and platforms  however also needs to have better visibility. It is hoped that by the next budget this reform is also made.      <\/p>\n\n\n\n

      <\/p>\n","protected":false},"excerpt":{"rendered":"

      Ms Shobhana Joshi, Co-Chairperson SAMDeS The allocation for the first Union Budget for Defence after Operation Sindoor received an increase of 15.19 […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":true,"template":"","format":"standard","meta":[],"categories":[46],"tags":[909,588,587,289,273,239],"yoast_head":"\nIn Depth Analysis of the Defence Budget 2026-27 | SAMDES INDIA'S BLOG<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.samdesindia.in\/blog\/in-depth-analysis-of-the-defence-budget-2026-27\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"In Depth Analysis of the Defence Budget 2026-27 | SAMDES INDIA'S BLOG\" \/>\n<meta property=\"og:description\" content=\"Ms Shobhana Joshi, 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