India’s Defence Budget: From Readiness To Endurance

I wrote on this portal on the eve of the Budget, outlining the strategic and economic environment within which the Defence Budget would inevitably have to be framed. That exercise was not intended to anticipate figures, but to identify the priorities and constraints that deserved attention. I make no claim to being a defence economist; I approach this as a practitioner and strategic affairs commentator. Judged against that backdrop, a first reading of the Defence Budget 2026–27 offers a measure of reassurance. While no allocation can fully satisfy the diverse and often competing aspirations placed upon it, this year’s budget reflects intent, direction, and a willingness to invest meaningfully in national security.

When the Defence Budget was presented, the headline was unambiguous. With a total outlay of ₹7.85 trillion, up from ₹6.81 trillion in the current financial year (a 15% rise), the government has delivered one of the most substantial increases in defence spending in recent years. In purely numerical terms, the message is clear; national security continues to command priority even amid competing fiscal demands.

Yet, as argued in the pre-Budget commentary, the true value of a defence budget lies not in its size alone, but in what it enables. The more important question is whether this allocation meaningfully strengthens India’s preparedness beyond short, controlled crises and toward sustained military contingencies. On that measure, Budget 2026–27 offers both reassurance and restraint.

A Clear Shift Toward Modernisation
The most consequential signal in the new budget is the sharp rise in capital outlay. At ₹2.19 trillion, capital expenditure has increased significantly (22%) from the ₹1.80 trillion allocated in 2025–26. This is not a cosmetic adjustment; it reflects a deliberate effort to accelerate modernisation across services. Compared to the Revised Estimates of ₹1.86 trillion last year, the rise works out to around 18%.

Within this, allocations for aircraft (₹637 billion ) and naval platforms (₹250 billion) stand out. These figures indicate continued emphasis on air power regeneration and maritime capability—both capital-intensive domains critical to deterrence and power projection. They also reinforce the government’s commitment to indigenisation, as a large proportion of capital procurement is now routed through domestic industry. The capital expenditure covers the procurement of major platforms such as fighter aircraft, warships, artillery and armoured vehicles, as well as funding for indigenous programmes. It accounts for about 28% of the total defence allocation.

This shift validates the expectation that the Budget would privilege long-term capability building over incremental sustainment alone. It also reflects lessons drawn from recent operational experience: precision, reach, and technological superiority increasingly shape the early phases of conflict.

Revenue Expenditure: Stability, Not Expansion
At the same time, revenue expenditure—covering salaries, operations, maintenance, and day-to-day readiness—stands at ₹5.54 trillion. Defence pensions alone account for ₹1.71 trillion, continuing their steady upward trajectory.

This remains the structural constraint within India’s defence finances. A large standing force, long service tenures, and legacy equipment inevitably impose a heavy revenue burden. The 2026–27 Budget does not attempt to disrupt this equilibrium. Instead, it sustains revenue allocations at levels sufficient to preserve readiness without allowing them to crowd out capital investment.

From a strategic standpoint, this balance represents one of the government’s most persistent and complex challenges. Readiness today cannot be sacrificed for modernisation tomorrow, nor can modernisation be perpetually deferred without risk. The Budget suggests that this tension is being addressed deliberately and with intent—maintaining current operational effectiveness while incrementally strengthening long-term capability rather than resorting to disruptive restructuring. This is a deliberate effort to meet the threats of both hybrid and conventional war which afflict our security.  

From Op Sindoor to Budgetary Reality
Seen through the lens of recent operational experience, the budget’s emphasis becomes clearer. Short-duration, high-intensity operations validate preparedness and command-and-control efficiency, but they do not test endurance. Budgets, by contrast, are instruments designed to carry military power beyond the initial phase of conflict—into the second and third weeks, when logistics, replenishment, maintenance, and manpower depth begin to matter as much as operational brilliance.

The rise in capital outlay directly addresses this requirement by strengthening future capability and replenishment capacity. However, endurance is not built by platforms alone. It also depends on ammunition stocks, spares availability, maintenance infrastructure, and logistics networks—areas that rarely receive explicit budgetary visibility.

On these counts, the Budget offers signals rather than solutions. There is no dramatic reallocation toward war-wastage reserves or sustainment ecosystems, but the enhanced capital envelope provides the fiscal space to address them over time, provided execution follows intent.

Jointness, Infrastructure, and Mobility
One of the quieter strengths of the Budget 2026–27 is its alignment with the broader themes articulated in the Economic Survey—resilience, infrastructure, and supply-chain security. While not always labelled as defence spending, investments in infrastructure, including roads, bridges, logistics hubs, civil aviation hubs and domestic manufacturing, directly enhance military endurance.

Jointness, however, remains more an organisational aspiration than a clearly funded operational construct. The Budget does not yet reveal a decisive shift toward theatre-level logistics integration or joint sustainment commands; that will probably happen incrementally with experience. This is not a failure of intent, but a reminder that institutional reform sometimes lags fiscal provision; it should therefore be catered for in the future.

Emerging Domains: Incremental, Not Transformational
The Budget continues to support emerging domains—space, cyber, unmanned systems, and defence R&D—but without a dramatic surge. This suggests a measured approach; integrating new capabilities into existing force structures rather than attempting rapid transformation.

From a risk-management perspective, this is understandable. Emerging technologies mature unevenly, and premature over-investment can be as costly as neglect. The challenge will be to ensure that incremental funding should not become habitual under-investment in areas that will dominate future conflicts. Defence planners will need close scrutiny of this

What the Budget Ultimately Signals
Taken as a whole, the Defence Budget 2026–27 does not represent a radical departure. Instead, it marks a strategic consolidation—strengthening modernisation momentum while maintaining fiscal discipline. It reassures without overstating, invests without overreaching, and prioritises capability development within known constraints. In other words it is a traditional approach, which is a safer bet.

Crucially, it aligns with the argument advanced before the Budget; that India’s defence planning must prepare not only for short, controlled contingencies, but for escalation that cannot be ruled out. The increased capital outlay directly supports this objective.

The Real Test Lies Ahead
Budgets signal intent; execution determines outcomes. The true measure of Defence Budget 2026–27 will lie in how effectively capital allocations translate into delivered capability, how quickly procurement timelines are compressed, and whether sustainment gaps are quietly addressed rather than publicly deferred.

If the pre-Budget article sought to frame the questions that mattered, the post-Budget assessment offers a provisional answer; simply that the government has chosen to invest in future capability while preserving present readiness, accepting trade-offs rather than denying them. That is pragmatism.

In that sense, this is not a budget designed to impress in the first week of conflict, but one that seeks—carefully and incrementally—to ensure that India is better placed if a short war does not remain short; a good contingency planning.