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The pace of defence modernisation appears to be accelerating, with the Ministry of Defence (MoD) utilising Rs 92,211.44 crore, more than 50% of its capital outlay of Rs 1.8 lakh crore for Financial Year (FY) 2025–26, by the end of September 2025. The capital allocation for the current fiscal year represents a 12.66% increase over the actual expenditure in FY 2024–25.
Capital expenditure plays a critical role in strengthening India’s defence preparedness by funding new acquisitions, R&D initiatives, and infrastructure development in border areas.
For FY 2025–26, the total defence budget stands at Rs 6,81,210.27 crore, divided broadly into capital and revenue heads. In the previous fiscal year, the ministry had achieved 100% utilisation of its capital allocation amounting to Rs 1,59,768.40 crore.
The strong pace of spending this year is expected to ensure the timely delivery of key platforms, including aircraft, ships, submarines, and advanced weapon systems, vital to the ongoing modernisation of the armed forces.
According to the ministry, several big-ticket projects are already in advanced stages of approval, and it remains committed to fully utilising the capital allocation by the end of the financial year. Preparations are also underway for discussions on revised budgetary estimates.
The MoD reaffirmed its commitment to promoting domestic defence manufacturing, a policy direction initiated in FY 2020–21. For FY 2025–26, Rs 1,11,544.83 crore has been earmarked for procurement from Indian industries, with 45% of this amount already spent by September.
This sustained focus on Atmanirbharta (self-reliance) in defence technology and manufacturing aims to encourage MSMEs and start-ups to participate in the sector. Over the past five years, the capital outlay for the services has grown by nearly 60%, underscoring the government’s emphasis on modernising the armed forces through indigenous capabilities.
Team BharatShakti
