New Delhi [India], February 1 (ANI): The Indian government has allocated a budget of Rs 7.8 lakh crore to the Defence Ministry for the fiscal year 2026-27. Of this, Rs 2.19 lakh crore has been earmarked for modernization under the Capital Outlay budget.
Overall, the Defence Ministry’s budget has seen a 15 percent increase compared to the previous year. The capital outlay, in particular, has risen by 21.84 percent, up from Rs 1.80 lakh crore in FY 2025-26 to Rs 2.19 lakh crore in FY 2026-27. Key projects include contracts for Rafale fighter jets, submarines, and unmanned aerial vehicles.
The Defence Ministry’s civil budget has been slightly reduced by 0.45 percent from last year’s Rs 28,554.61 crore. Meanwhile, allocations for Defence Services (Revenue) and Capital Outlay stand at Rs 3,65,478.98 crore and Rs 2,19,306.47 crore, reflecting increases of 17.24 percent and 21.84 percent, respectively. Defence pensions have also risen, with Rs 1,71,338.22 crore allocated for the year.
In a boost to the defence sector, Finance Minister Nirmala Sitharaman announced an exemption from basic customs duty on raw materials imported for manufacturing aircraft parts used in maintenance, repair, or overhaul by defence units.
Responding to U.S. tariffs, the finance minister also proposed reducing the tariff rate on all dutiable goods imported for personal use from 20 percent to 10 percent. To promote exports and support the seafood industry affected by U.S. tariffs, she proposed increasing the limit for duty-free imports of specified inputs used for processing seafood for export from 1 percent to 3 percent of the FOB value of the previous year’s export turnover.
“I also propose to allow duty-free imports of specified inputs, currently available for exports of leather or synthetic footwear, to exports of shoe uppers as well,” Sitharaman said.
The finance minister further proposed exemptions from basic customs duty for capital goods used in manufacturing lithium-ion cells for batteries and processing critical minerals.
Sitharaman presented the Union Budget for the record ninth time. (ANI)
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