Budget 2026: Post Operation Sindoor, Defence Gets Major Funding Boost For Aircraft, Missiles, Armed Drones

In the first Union Budget presented after Operation Sindoor, the Centre has sharply stepped up spending on defence modernisation, signalling a renewed focus on long-term military preparedness and advanced capabilities.

Capital outlay rises sharply for defence

Finance Minister Nirmala Sitharaman announced a capital outlay of ₹5.95 lakh crore for defence, a significant rise from ₹4.92 lakh crore in the previous Budget. This marks an overall increase of about 22 per cent, with spending earmarked specifically for modernisation going up by 24 per cent.

According to sources aware of the discussions, the defence ministry had sought an increase of around 20 per cent. The higher allocation is aimed at strengthening long-range standoff capabilities, military aircraft, missile systems and armed drones, particularly in the context of lessons drawn after Operation Sindoor.

Focus on aircraft, missiles and drones

Defence officials believe the enhanced Budget support will accelerate efforts to modernise both equipment and platforms across the armed forces. Several big-ticket projects are in the pipeline, including those linked to Rafale fighter jets, submarines and unmanned aerial vehicles, sources said.

For FY26, the defence ministry's capital outlay stands at ₹1.8 lakh crore. Within this, ₹63,733 crore has been allocated for aircraft and aero engines, underlining the emphasis on air power and indigenous manufacturing.

Defence spending trajectory over recent years

In 2025-26, the government had set aside ₹6.8 lakh crore for the overall defence budget. The capital outlay that year was pegged at ₹1.8 lakh crore, which later rose to ₹1.87 lakh crore in the revised estimates, reflecting mid-year adjustments to meet procurement needs.

The latest Budget continues this upward trend, with officials viewing the allocations as critical for closing capability gaps and keeping pace with evolving security challenges.

Customs duty exemptions to support manufacturing

The finance minister also announced measures to ease costs for defence manufacturing and maintenance. "It is proposed to exempt basic customs 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," she said in her Budget speech on Sunday.

In addition, she announced an exemption from basic customs duty on components and parts needed for the manufacture of civilian, training and other aircraft, a move expected to benefit both defence and civil aviation ecosystems.