Budget 2026: Will Sitharaman boost defence post-Operation Sindoor?

Union Finance Minister Nirmala Sitharaman will present her ninth consecutive budget on Sunday (February 1), a practice not many of her predecessors have followed. However, her upcoming budget presentation will be the first since Operation Sindoor, which was carried out against terror bases in Pakistan in the wake of a dastardly attack on civilians, mostly Hindus, in Pahalgam in Jammu and Kashmir on April 22 last year.

The three-day air skirmishes that followed between the Indian and Pakistani forces, including the use of drones, led to wide military, strategic and diplomatic repercussions.

Also read: Will Budget 2026-27 give new and old tax regimes a makeover?

Keeping in view the brief but intense conflict with Pakistan during Operation Sindoor, China’s support for Pakistan, and the growing anti-India sentiments in Bangladesh, will the upcoming budget make a special focus on defence, particularly when the number of hostile neighbours is on the rise? With military and other cooperations between China, Pakistan, Bangladesh and countries such as Turkey increasing, can the Narendra Modi government afford not to upgrade the country’s forces?

For Sitharaman, defence is not unfamiliar

Sitharaman herself was the defence minister when India conducted the Balakot airstrike against Pakistan in early 2019 after the terror attack on India’s paramilitary personnel, killing at least 40 people, in Pulwama, Jammu and Kashmir. One would not, however, rule out the prospect of her dedicating funds and resources to the armed forces with renewed vigour in this budget, particularly when defence and strategic experts have not ruled out further conflicts between India and Pakistan, which could inevitably involve more countries.

Army expects rise in defence budget

Ahead of Army Day on January 15, 2026, General Upendra Dwivedi, Chief of the Army Staff (CoAS), had said that the armed forces hope to see an increase in the defence budget so that the indigenous industries related to the sector thrive and give a push under the Aatmanirbharta initiative.

Also read: Will Modi's electoral juggernaut steer the direction of Budget 2026-27?

Addressing the media, he said the government has assured the army that if it wanted to spend money, there would be no shortage of funds. The CoAS also said that 2026 has been declared the “Year of Networking and Data Centres” to mark a decisive step in India’s ongoing military transformation.

He added that in 2025, the focus was on shifts in the defence-procurement policy, strengthening infrastructure, and adopting technology to suit the demands of modern warfare, such as creating separate units for drones and counter-drones. It may be noted here that Defence Minister Rajnath Singh had called 2025 a “year of reforms”, an initiative that aimed at transforming the armed forces into a technologically advanced, combat-ready force with the ability to conduct multi-domain integrated operations.

General Dwidevi also said in his remarks to the media that the army is contemplating setting up a Rocket and Missile Force, something that countries such as China have done to bolster their air defence.

In 2025, defence allocation went high

What has kept defence experts and observers busy is the question of whether Sitharaman would significantly increase the allocation for the defence budget.

Also read: INDIA bloc leaders resolve to corner govt on MGNREGA, SIR in Budget session

Under the 2025-26 budget, the government allocated Rs 6.81 lakh crore to the defence ministry, which was 9.5 per cent higher than the budgetary estimate for the 2024-25 financial year and stood at nearly 13.5 per cent of the Union budget, making it the highest among all ministries.

On January 1, 2026, the government said in the financial year 2025-26, till the end of December, the defence ministry inked capital contracts worth Rs 1.82 lakh crore for the armed forces' modernisation.

When The Federal spoke with Major General (Retired) P K Sehgal, he said the focus should be on addressing the shortcomings that were observed during Operation Sindoor. For example, there are only 107 units of the 'Akashteer' air defence system, while we should have 500 units.

'Akashteer' is India’s fully indigenous and automated air defence control and reporting system, which is AI-powered and is capable of intercepting and neutralising aerial threats in the form of drones, missiles and aircraft. The system had played a key role in countering Pakistani air attacks at night during Operation Sindoor.

Only 1.9% of GDP on defence

While India made a record allocation to the defence budget in 2015-26, overall it was less than 2 per cent (1.9) of Gross Domestic Product (GDP), prompting many experts to question long-term capability development. In 2020-21, it was 2.1 per cent of the GDP.

Also read: Did Budget 2025 keep its promises? Here is a progress report

Many experts believe that, given the challenges India faces and the prevailing global situation, India should spend three to four per cent of its GDP on defence. The Parliamentary Standing Committee on Defence has also suggested spending three per cent of the GDP on defence. While 46 per cent of the total defence allocation is spent on salaries and operations, 24 per cent goes into pensions. Only a little more than a fourth or 26 per cent is allocated to modernisation and the needs of the armed forces.

Govt should raise defense budget, feel experts

To understand this better, out of the Rs 6.81 lakh crore allocated for the defence budget in 2025-26, only Rs 1.80 lakh crore was provisioned for capital outlay for the defence services. A little over Rs 3 (3.12) lakh crore was allocated for the armed forces, Rs 1.60 lakh crore for pensions, and Rs 28,683 crore for civil organisations under the defence ministry.

However, given the quickly changing global landscape and the new challenges of modern warfare, it is crucial to strengthen the Indian Army with modern weapons and new technologies. But is an allocation of only Rs 1.80 lakh crore for capital expenditure sufficient? According to Major General (Retired) Sehgal, the defence budget should be 3 to 3.2 per cent of the GDP, and capital expenditure should be allocated at one per cent of the GDP.

Expectations from 2026-27 budget

In recent years, the three branches of the armed forces have received reduced budgets for procuring weapons and modern equipment.

This has happened despite the fact that the army faces major frontal challenges along the Line of Control (LOC), the Line of Actual Control (LAC), and the International Border (IB). CoAS General Dwivedi has stated that there are still eight active terrorist camps on the IB and the LOC, accommodating nearly 150 terrorists. The Indian Air Force also faces several challenges.

Also read: What Budget 2026 can do to unlock agriculture carbon credits for farmers

The Indian Air Force also has its challenges. While it should have 42 squadrons, it currently has only 31. Due to engine and supply issues, the production of Tejas fighter jets is not progressing at the required pace. Meanwhile, China is rapidly advancing its air force with new technologies, stealth aircraft, and long-range weapons. In this context, Sitharaman's budget becomes all the more important. According to Major General (Retd.) Sehgal, the process for procuring 114 Rafale aircraft should be expedited to boost the country’s defences.

In all, the military conflict with Pakistan last year is expected to have a major impact on the upcoming budget. On February 1, major announcements are expected as India looks to modernise its military power.

(This article was first published in The Federal Desh.)