The first Union budget since Operation Sindoor has allocated ₹2.19 lakh crore for defence modernisation, a nearly 22 per cent rise from the previous year with fund hikes for aircraft and aero engines.

Overall, the defence budget has been increased by 15 per cent, taking it to ₹7.84 lakh crore from the ₹6.81 lakh crore allocated for the current financial year.

Of this, ₹3.65 lakh crore has been earmarked for defence services revenue, ₹2.19 lakh crore for capital expenditure (modernisation) — up 21.84 per cent from the current financial year’s ₹1.80 lakh crore — ₹1.71 lakh crore for defence pensions and ₹28,554.61 crore for civil defence spending.

The defence budget accounts for 14.67 per cent of this year’s Union budget, the highest among the ministries. It, however, equals a mere 1.99 per cent of India’s projected gross domestic product for 2026-2027.

Under capital expenditure, ₹63,733 crore has been set aside for aircraft and aero engines while ₹25,023 crore has been allocated for the naval fleet.

Defence ministry sources said the India-Pakistan military conflict last May had highlighted the need to modernise the armed forces, equipping them with advanced weaponry and aerial vehicles.

Operation Sindoor also underlined the need to strengthen the country’s long-range strike capabilities, key to modern warfare.

The ministry has big projects in the pipeline, such as contracts for more Rafale fighter jets, submarines and unmanned aerial vehicles.

“The hike in allocation will definitely boost the drive to modernise the armed forces and their equipment,” a ministry official said.

He said the air force was keen on having additional combat planes and helicopters, and the navy wanted a dozen submarines to counter China’s ever-expanding presence in the Indian Ocean.

The army, deployed heavily along the China and Pakistan frontiers, has plans to procure assault rifles, surveillance drones and body armour to bolster its combat prowess.

Sources said the Chinese army — locked in a border standoff with its Indian counterpart at multiple transgression points in eastern Ladakh since May 2020 — has been continually increasing its troops in the forward areas. China is said to be occupying close to 1,000sqkm of India-claimed territory.

Defence minister Rajnath Singh lauded the defence budget.

“This budget, following the historic success of Operation Sindoor, has reinforced our resolve to further strengthen the country’s defence system,” he said.

He added that this budget’s focus was “the modernisation of our three armed forces” and that it “strengthens the balance between security, development and self-reliance….”

A defence ministry statement said that besides modernisation, “the significantly enhanced allocation will also cater for the financial requirements that have arisen due to the emergency procurement of arms and ammunition made subsequent to Operation Sindoor”.

In her budget speech, finance minister Nirmala Sitharaman proposed basic customs duty exemption to components and parts required for the manufacture of civilian, training and other aircraft.

She also waived basic customs duty on raw materials imported for the manufacture of aircraft parts towards maintenance, repairs or overhaul.