Union Budget 2026: India’s Priority Is Defence Sector; Here’s everything you should know
The 2026 Union Budget shows that India prioritizes defence expenditure beyond its status as a budget item because it serves as a matter of national importance. The government spends its second-highest annual budget on defence after agriculture because defence modernization efforts and artificial intelligence military programs and domestic production capabilities receive priority. The 2025 Operation Sindoor mission showed that Indian armed forces require modern equipment to maintain their competitive advantage, which this budget will deliver through its funding.
The total defence budget might reach ₹8 lakh crore because projections show that first-time defence spending will hit this milestone, which includes most funding for capital projects and advanced research and strategic initiatives. The defence funding supports India’s future battlefield needs through its support of AI-based air defence systems and its development of soldiers who operate under the Drone Shakti program.
The military receives investments that demonstrate its power because every rupee invested creates self-sufficient capabilities through the development of domestic missile defence systems and border defence infrastructure, which enables India to maintain its status as a top military power.
India’s Indigenous Missiles: National Pride and Power, Defence Sector in Spotlight Post-2025 Attacks In Union Budget 2026
The indigenous missile systems of India demonstrate their value as advanced technology because they serve as a source of national pride for the country. The Akash surface-to-air missiles executed their duties during Operation Sindoor in May 2025 by accurately destroying enemy drones and low-altitude aerial threats through their timed operations. The supersonic BrahMos missiles targeted essential enemy installations, including airbases and command centres, to show that India possesses both destructive power and precise military capabilities.
The process of innovation continued to develop. The Bhargavastra micro-missile counter-drone system is being fast-tracked to tackle the modern threat of swarm drones, keeping India one step ahead of evolving aerial dangers. These successes establish a national defence system based on self-sufficiency, which decreases dependence on foreign military supplies while providing the armed forces with crucial battlefield advantages.
The defence sector has become the main focus since the devastating attacks earlier this year. Every missile test and system upgrade serves as a demonstration of India’s dedication to securing its airspace through government funding, which supports AI-driven initiatives, modernization efforts, and local research and development.
Financial Allocations For Defence In Union Budget 2026
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Total Budget: Ministry of Defence seeking a 20% increase over last year’s ₹6.81 lakh crore, potentially reaching ₹8 lakh crore.
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Capital Outlay: Expected rise of 10–25%, likely crossing ₹2 lakh crore for the first time.
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R&D Funding: DRDO’s budget may increase by ₹10,000 crore, focusing on AI, cyber warfare, and advanced sensors.
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AI and Autonomous Systems: Mission Sudarshan Chakra, an AI-enabled air defence shield, builds on the 94% targeting accuracy achieved during Operation Sindoor.
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Drone Shakti: The program will prepare every Indian Army soldier to operate drones by 2027; new training centres will be established, and military-grade drones will be produced through the program.
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Atmanirbhar Bharat (Indigenisation): Approximately 75% of the modernization budget will be allocated to domestic procurement, aiming to achieve ₹3 lakh crore in annual defence production by 2029.
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Export Push: The defence export target for FY2030 is set at ₹50,000 crore, supported by export councils and improved credit facilities for manufacturers.
Strategic Defence Initiatives: AI, Drones, Indigenisation, and Export Ambitions
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AI and Autonomous Systems: Mission Sudarshan Chakra, an AI-enabled air defence shield, builds on the 94% targeting accuracy achieved during Operation Sindoor.
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Drone Shakti: The program will prepare every Indian Army soldier to operate drones by 2027; new training centres will be established, and military-grade drones will be produced through the program.
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Atmanirbhar Bharat (Indigenisation): Approximately 75% of the modernization budget will be allocated to domestic procurement, aiming to achieve ₹3 lakh crore in annual defence production by 2029.
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Export Push: The defence export target for FY2030 is set at ₹50,000 crore, supported by export councils and improved credit facilities for manufacturers.
Critical Projects in Focus
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Naval Fleet: Funding for next-generation submarines, including the third indigenously built nuclear-powered submarine.
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Air Power: Modernisation of Su-30 fighter jets; stage payments for LCA Tejas and deck-based fighters.
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Border Infrastructure: BRO to receive 10% hike for strategic tunnels and roads in Ladakh, Arunachal Pradesh, and Rajasthan.
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