NEW DELHI: The Ministry of Defence (MoD) has utilised more than 50% of the capital outlay for the 2025-26 financial year by the end of September 2025.
This will result in ensuring timely delivery of vital platforms including aircraft, ships, submarines and weapons systems required for the modernisation of the armed forces in the coming year, said the MoD.
The majority of the expenditure has been on aircraft and aero engines followed by land systems, electronic warfare equipment, armaments, and projectiles. Capital expenditure is crucial for the defence sector as it funds the acquisition of new assets, research & development, and infrastructural development in the border areas, which are all essential for the country's national security.
In absolute terms, the capital expenditure used stands at Rs 92,211.44 crore (51.23%) out of the total allocation of Rs 1,80,000 crore. The MoD had utilised 100% of capital expenditure amounting to Rs.1,59,768.40 crore in the last financial year.
As reported earlier by The New Indian Express (TNIE), the defence budget allocated by the government for 2025-26 has been pegged at Rs 6,81,210.27 crore.
The budgetary allocations are broadly categorised under the capital and revenue subheads.
Capital outlay is for fresh purchases of systems, equipment and raising of military infrastructure. Allocation to the armed forces for revenue expenditure (other than salary) is meant for sustenance and operational commitment.
Moreover, capital expenditure has a multiplier effect on economic growth and employment generation.
With this pace of expenditure and big-ticket projects which are at advanced stages of approval, the MoD is committed to fully utilising the allocation under capital head by the end of the current FY also. In parallel, the ministry is working on the budgetary projections to be discussed for the revised estimates. In the current FY, the MoD had been allocated Rs 1,80,000 crore under capital head at the Budget Estimate stage by the Ministry of Finance. This allocation was 12.66% higher than the actual expenditure of FY 2024-25.
Since FY 2020-21, the MoD has been consistently strengthening the domestic industry by earmarking funds for procurement from them. For FY 2025-26, Rs 1,11,544.83 crore has been earmarked for the domestic industry. Significant expenditure to the extent of 45% has been recorded till date out of the funds earmarked for domestic procurement. This allocation is aimed to boost Aatmanirbharta in defence technology & manufacturing and to attract MSMEs and start-ups to the sector. Allocation under capital outlay for the services has shown a rising trend over the past several years. It has increased by around 60% during the last five years.
