‘Made-in-India’ Rafale, Air Defense Systems, Long-Range Rockets: ₹1.39 Lakh Crore Allocated to Domestic Defense Firms

In Budget 2026-27, the government has significantly boosted the defense sector, with a capital outlay of ₹2.19 lakh crore, of which ₹1.39 lakh crore is earmarked exclusively for procurement from domestic defense companies. This move reflects a dual focus: equipping the armed forces with advanced weaponry while promoting self-reliance in defense manufacturing.

Key Budget Highlights

• The total defense allocation stands at ₹7.85 lakh crore, a 15.19% increase from the previous fiscal year. Defense spending will constitute 14.67% of the central government’s total expenditure, roughly 2% of India’s GDP.
• The capital expenditure of ₹2.19 lakh crore marks a 21.8% increase over FY 2025-26, emphasizing the government’s commitment to modernizing the armed forces.

Focus on Indigenous Production

• Of the capital outlay, ₹1.39 lakh crore is reserved for purchases from Indian defense firms, including Rafale fighter jets, jet engines, long-range rocket systems, and advanced air defense weapons.
• Notably, the budget anticipates Rafale fighter jets to be manufactured in India, with procurement costs exceeding ₹30,000 crore, and the first tranche expected in the next fiscal year.

Strategic Procurement for Future Readiness

• The government plans to acquire next-generation submarines, advanced drones, loitering munitions, smart and lethal weapons, warships, and specialized vehicles, in line with current geopolitical and global defense trends.
• To support modernization, customs duties on imported aircraft spare parts and maintenance components have been fully waived.

Strengthening Personnel and Training

• The budget also allocates enhanced funding for the Agnipath scheme, aiming at large-scale recruitment in the armed forces during the upcoming fiscal year.

This defense budget clearly underscores India’s commitment to self-reliance, strategic readiness, and domestic industry empowerment, while ensuring the armed forces are equipped to meet emerging security challenges.