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Finance Minister Nirmala Sitharaman in an exclusive post-Budget interview to News Agency said the government has not cut back on defence spending, rather it ensured that defence pensions and procurement expenses are never lowered.
"We pay a lot of attention to them. This time also there was no issue in the defence budget. But we must understand the peculiarity of the defence budget. The year in which the payment has to be made, that year a higher provisioning has to be done," Ms Sitharaman told News Agency.
"The year the order is placed, it is the instalment that needs to be paid. The payments spread over a long term... I can confidently say and we should recognise the fact that nearly 60 per cent of components made in India are bought by defence units," Ms Sitharaman said, adding it is a different matter if a large-ticket purchase has to be made from another country.
"Mainly, running consumables and other things are bought from India. We make defence components not only for the domestic market, we also export them. That is why we have crossed Rs 25,000 crore earnings with defence components exports," the Finance Minister said.
In Budget 2025, Ms Sitharaman set aside Rs 6.81 lakh crore crore as the defence budget for fiscal 2026, a 9.53 per cent increase over the allocation of Rs 6.22 lakh crore for the current fiscal. The armed forces have been looking to acquire new weapon systems in the face of security challenges from China and Pakistan.
Of this, Rs 1.8 lakh crore has been earmarked for capital expenditure that largely includes purchasing weapons, aircraft, warships and other military hardware. The budget for defence is around 1.9 per cent of the projected gross domestic product (GDP) and the increase in the allocation is around 6.2 per cent if compared to the revised allocation of Rs 6.41 lakh crore for the current fiscal.