Budget 2026 Defence Push: Why India Must Slash Imports and Supercharge ‘Atmanirbharta’

Budget 2026 for defence: Why capital outlay should be hiked for ‘Atmanirbharta’

India stands at a strategic crossroads. With rising border tensions, evolving warfare technologies, and global supply chain fragility, the upcoming Budget 2026 defence allocation isn’t just another line item—it’s a national security imperative. And according to the Federation of Indian Chambers of Commerce & Industry (FICCI), the government must act decisively to supercharge indigenous defence capabilities by significantly increasing capital expenditure.

The core message is clear: if India is serious about ‘Atmanirbharta’ (self-reliance) in defence, it’s time to put money where the mission is. That means shifting spending away from revenue-heavy items like salaries and pensions—and toward capital outlays that fund next-gen weapons, platforms, and homegrown innovation through the Defence Research and Development Organisation (DRDO).

Table of Contents

Why Capital Outlay Is the Key to Atmanirbharta

In India’s defence budget, expenditures are split into two main buckets: revenue (salaries, maintenance, day-to-day operations) and capital (procurement of new equipment, R&D, infrastructure). For years, revenue has gobbled up over 60% of the total allocation, leaving capital starved.

This imbalance directly undermines Budget 2026 defence goals for self-reliance. You can’t build missiles, drones, or fighter jets with operating funds—you need capital investment. As FICCI rightly points out, a higher capital outlay isn’t optional; it’s the engine of indigenous modernisation .

FICCI’s Four-Point Blueprint for Budget 2026 Defence

FICCI’s pre-budget recommendations lay out a clear, actionable roadmap. Here’s what they’re urging the Finance Ministry to prioritise:

  1. Increase Capital Outlay Share: Raise the capital component to at least 40% of the total defence budget to enable large-scale procurement and development.
  2. Boost DRDO Funding: Allocate dedicated, multi-year budgets for critical DRDO projects to ensure continuity and reduce delays.
  3. Accelerate Private Sector Integration: Streamline testing, certification, and procurement processes for domestic MSMEs and startups in the defence ecosystem.
  4. Focus on Emerging Tech: Prioritise investments in AI, cyber warfare, quantum tech, and unmanned systems—areas where India can leapfrog legacy dependencies.

The DRDO’s Funding Gap and Innovation Bottleneck

The DRDO is the backbone of India’s indigenous defence ambitions. Yet, chronic underfunding and bureaucratic hurdles have slowed progress on flagship programs like the AMCA (Advanced Medium Combat Aircraft) and next-gen missile systems.

Currently, DRDO’s annual budget hovers around ₹23,000 crore—a fraction of what global peers invest in military R&D. For context, the U.S. Department of Defense spends over $100 billion annually on research alone. Without a substantial, predictable funding stream in Budget 2026 defence, India risks falling further behind in the technology race.

How Much Does India Spend? A Global Comparison

India is the world’s third-largest military spender, allocating roughly 2.4% of its GDP to defence in 2025. But raw numbers can be misleading. Unlike China or the U.S., a huge chunk of India’s budget goes toward personnel costs due to its massive standing army.

According to data from the Stockholm International Peace Research Institute (SIPRI), India’s capital expenditure as a share of defence spending lags behind even regional peers like Vietnam and South Korea—both of whom are aggressively investing in domestic defence industries . This structural inefficiency must be corrected in Budget 2026.

Operation Sindoor and the Need for Rapid Modernisation

Recent military exercises like Operation Sindoor have exposed critical gaps in India’s warfighting readiness—particularly in precision-guided munitions, electronic warfare, and battlefield surveillance. Many frontline units still rely on outdated Soviet-era platforms.

A robust Budget 2026 defence with elevated capital outlay could fast-track the induction of systems like the Akash-NG missile, indigenous loitering munitions, and the Light Combat Helicopter (LCH)—all of which are ready or near-ready but await bulk orders and funding.

What a Smart Defence Budget Could Unlock

Beyond national security, a strategically allocated defence budget is an economic catalyst. Every ₹100 spent on indigenous defence R&D generates up to ₹300 in downstream industrial activity, according to FICCI estimates.

Increased capital spending would:

  • Create high-skilled jobs in aerospace, electronics, and materials science.
  • Reduce the $10+ billion annual defence import bill.
  • Position India as a potential defence exporter—targeting markets in Southeast Asia, Africa, and Latin America.
  • Strengthen the “Make in India” initiative with tangible, high-impact outcomes.

For deeper insights into India’s defence industrial policy, explore our analysis on [INTERNAL_LINK:make-in-india-defence-success-stories].

Conclusion: No More Excuses for Delayed Self-Reliance

The call for a transformative Budget 2026 defence isn’t just about hardware—it’s about sovereignty, economic resilience, and strategic autonomy. FICCI’s recommendations provide a clear, pragmatic path forward. The question now is whether policymakers will seize this moment to turn the vision of ‘Atmanirbharta’ from a slogan into a reality. In an increasingly volatile world, delay is not an option.

Sources

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top