Defense Budget 2026: Finance Minister Nirmala Sitharaman will present the budget in the Lok Sabha on February 1. The country’s defense expenditure has once again taken center stage. Considering the current global situation, it will be interesting to see how much the government will increase the defense budget this time? The government had allocated Rs 6,81,210.27 crore to the Defense Ministry for FY 2025-26, which was 9.5% more than FY 2024-25. But, considering the current circumstances, experts believe that this time the allocation for defense sector can be increased by 20%.
Expected to keep defense at strategic center stage in Budget 2026
Experts said Defense is expected to take strategic center stage in Budget 2026, with emphasis on higher capital expenditure, faster indigenization and technology-based capacity building. He said that given the increasing geopolitical risks and recent operational experiences, the focus may remain on capital acquisition, R&D, diversified sourcing and strengthening domestic manufacturing, including greater participation of startups under the Defense Vision 2047 framework. The industry also wants a policy on localization norms, a more pragmatic approach to indigenous content requirements, especially in sectors where India is still dependent on imported subsystems.
The changing nature of war should be visible in Budget 2026
Experts believe that the changing nature of war should be reflected in Budget 2026. AI-enabled systems, autonomous platforms including drones, cyber resilience and data-driven decision-making can no longer remain on the margins of defense planning – they must be integrated into procurement, testing and contracting models. He said defense companies are not just looking for higher budget allocation, but they also want faster contracting, predictable export regime, legal clarity on intellectual property (IP), export approvals and lifecycle support.
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