Budget 2026: Defence Takes Center Stage in India’s Growth Drive
Budget 2026: Defence Takes Center Stage in India’s Growth Drive
Budget 2026 could tilt toward defence, indigenisation, and exports, as experts expect higher allocations to boost India's strategic capabilities.
Finance Minister Nirmala Sitharaman is set to present the Union Budget for FY 2026–27 on Sunday, February 1, with market participants betting on a sharper focus on defence and other growth engines. Defence is emerging as a key area of focus, driven by geopolitical tensions and a push to bolster strategic resilience. Experts point to the Centre’s recent move to form a dedicated committee to strengthen allied defence capabilities as a signal of sustained policy intent.
Pranay Aggarwal, Director and CEO of Stoxkart, says budget support could accelerate the sector if it prioritises indigenisation and exports, including expanding the Positive Indigenisation Lists, strengthening defence industrial corridors with fiscal incentives and infrastructure, simplifying licensing and export procedures, and increasing allocations for R&D and technology transfer. Targeted export incentives and credit support would be crucial to scaling defence exports over the long term.
In Budget 2025–26, the government allocated ₹6.81 lakh crore ($81 billion) to the Ministry of Defence, marking a 9.5% increase from the previous year. With rising geopolitical tensions—from conflicts in the Middle East to global strategic realignments—experts believe defence spending could rise further in the upcoming Budget, with some anticipating around a 20% higher allocation.
Beyond defence, the Budget is expected to pursue fiscal consolidation while expanding capital expenditure and sustaining macro momentum. On the Make in India front, tariff rationalisation could support domestic manufacturing, as policymakers aim to attract foreign investment and keep India at the forefront of design and innovation. Overall, Budget 2026 could set a trajectory for sustained growth and strategic resilience, balancing prudent spending with bold steps on indigenisation and exports.
