Defense contracts worth ₹1.8L crore signed in FY26
What's the story
The Indian government has signed defense contracts worth ₹1.82 lakh crore in the financial year 2025-26, till December-end. The contracts are aimed at modernizing the armed forces and improving India's defense readiness. The Defense Acquisition Council (DAC) has also approved capital acquisition proposals worth over ₹3.84 lakh crore since January 2025, focusing on indigenization and modernization of defense capabilities.
Budget utilization
Capital acquisition budget and expenditure
The Ministry of Defense (MoD) has utilized 80% of its capital acquisition budget for FY26, amounting to around ₹1.2 lakh crore. This is part of the total budgetary allocation for the MoD in FY26, which stands at ₹6.81 lakh crore. The modernisation budget covers new aircraft, ships, tanks, weapons and missiles among other things needed to keep the armed forces up-to-date and ready for any situation.
Expenditure details
Overall capital expenditure and future plans
The MoD's overall capital expenditure has reached 76%, including infrastructure, land, research and development. Defense Secretary Rajesh Kumar Singh had said at an industry event in November that the MoD would seek a nearly 20% increase in the modernization component of the FY27 defense budget. This is roughly double the usual 10% increase seen in previous years, which could mean a modernization outlay of around ₹1.79 lakh crore in FY27.
Policy reforms
Initiatives to boost indigenization and defense readiness
The MoD is also working on a number of policy reforms to boost indigenization in defense and secure supply chains. These include simplifying defense manufacturing licenses, mapping the competencies of micro, small and medium enterprises (MSMEs), and preparing market intelligence reports for better demand-supply analysis in defense procurement. The ministry has also approved capital acquisition proposals worth over ₹3.84 lakh crore since January 2025 to enhance India's defense readiness with a focus on modernization through indigenization.