Sindoor effect: India’s capital outlay for defence jumps 18%

India has increased the capital outlay for defence by about 18% to nearly ₹2.2 trillion for the financial year starting 1 April (FY27), as the country looks to acquire sophisticated weapons and modernise its military assets amid rising security risks.

- Subhash Narayan & Rituraj Baruah

The revised estimates put the defence sector's capital outlay at ₹1.86 trillion in FY26.

"In the current geopolitical scenario, quantum jump in the modernisation budget is a strategic imperative. During FY 2025-26, up to 3rd quarter i.e., till December 2025, MoD (ministry of defence) has concluded contracts worth ₹2.10 lakh crore and has, so far, given Acceptance of Necessity approval for more than ₹3.50 lakh crore. The upcoming projects under capital acquisition will equip the Armed Forces with next generation fighter aircraft, smart and lethal weapons, ships/submarines, unmanned aerial vehicles, drones, specialist vehicles, etc," the defence ministry said in a statement on Sunday.

Capital outlay refers to the allocation of capital for acquisition, upgradation and maintenance of assets, which in this case would mean artillery, and heavy machinery. Out of the overall capital expenditure for FY27, ₹63,733.94 crore will go towards purchase of aircraft and aero engines, ₹82,217.82 crore towards other equipment and ₹25,023.63 crore towards naval fleet.