India's Defence Budget May Rise 20% in FY26, says Defence Secretary

India is preparing to place a larger demand for defence funding in the FY26 Union Budget, with Defence Secretary Rajesh Kumar Singh stating that the ministry will seek around a 20% increase.  

He said the annual rise has usually been about 10%, but the current environment requires a bigger request. 

Comment on Falling Share of GDP 

Singh noted that defence spending as a percentage of GDP has been declining, creating room for a higher allocation. He said this trend will be highlighted when the ministry submits its proposal for next year’s budget. 

Speaking at a FICCI event, Singh described India’s surroundings as a “tough neighbourhood.” His remarks come at a time when regional tensions remain active, adding pressure on planning and resource allocation for the armed forces. 

Possible Shift in Spending Pattern 

If the request is accepted, the defence budget in FY26 may see changes in how money is distributed across procurement, operations, and infrastructure.  

A larger allocation could influence timelines for projects already underway, depending on how much the government finally approves. 

Modernisation Underway 

Several programmes aimed at updating equipment and improving support systems are in progress. A higher budget could help maintain these schedules, especially for upgrades, maintenance work, and expansion of training requirements. 

A rise of this scale may increase activity across industries connected to defence. State-owned and private manufacturers could see higher demand for equipment and components if procurement activity expands in the coming year. 

Fiscal Planning Requirements 

A 20% jump in allocation would need to be weighed against commitments in other sectors. The final call will depend on the overall fiscal space available to the government and revenue projections for FY26. 

Read More: Aadhaar No Longer Valid Proof of Birth in Uttar Pradesh and Maharashtra: Here's why! 

Conclusion 

The plan seeks a 20% increase in the defence budget for FY26 points to changing requirements and ongoing projects. The final allocation will be known once Budget discussions are completed. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.   

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.