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MoD to seek steepest arms buying budget hike in at least a decade for FY28

Defence Secretary Rajesh Kumar Singh says the ministry will seek a 35 per cent increase in FY28 modernisation funding, after fully using allocations and stepping up contracts.

Defence Secretary Rajesh Kumar Singh | Image : Wikipedia

Bhaswar Kumar New Delhi

3 min read Last Updated : Oct 09 2026 | 11:06 PM IST

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Defence Secretary Rajesh Kumar Singh on Friday said that the Ministry of Defence (MoD) will try to seek a 35 per cent rise in 2027-28 (FY28) for the defence Budget’s modernisation component, which funds the capital acquisition requirements of the Army, Navy and the Air Force. If granted, this would be the sharpest increase in at least a decade in the armed forces' arms procurement budget. He was speaking at the Society of Indian Defence Manufacturers (SIDM) Annual Session here.

Part of the capital outlay in the defence Budget, the modernisation capital budget funds the purchase of aircraft, ships, tanks, weapons, missiles and other military equipment. The capital outlay on defence services rose by almost 22 per cent to ₹2.19 trillion in FY27, from the FY26 Budget Estimate (BE) of ₹1.80 trillion. Of this, ₹1.85 trillion has been earmarked for capital acquisition—the modernisation capital budget—which is more than 24 per cent higher than the FY26 BE under the same head.

Singh said the ministry had so far succeeded in fully utilising its revised allocations under the modernisation capital budget, and had then approached the Ministry of Finance for higher allocations in subsequent years. He also pointed to the increase of more than 24 per cent in the current financial year. “… For the next year, we are looking for a 35 per cent increase, which, of course, I’m not sure we’ll get, but we’ll try and get something close to that. At least, hopefully, they’ll give us something like 25 per cent,” he added.

The MoD signed capital acquisition contracts worth more than ₹2 trillion in each of FY25 and FY26, and fully utilised the modernisation capital budget in both years.

“This is designed also to arrest the declining share of GDP when it comes to our defence expenditure. It is not appropriate in many ways that a country with 17 per cent of the world’s population is spending about three per cent of global arms expenditure… and less than two per cent of its own GDP (gross domestic product). We need to arrest that trend. That trend has been arrested somewhat in the current year’s allocation, and we’ll take it further in the coming year,” said Singh.

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The budgetary allocation for defence reversed its decline as a share of GDP in FY27, rising to just under 2 per cent (1.99 per cent) with a BE allocation of about ₹7.85 trillion. The FY26 allocation of slightly over ₹6.81 trillion had amounted to 1.91 per cent of GDP.

Singh also said the MoD had roughly doubled the pace of contract signings, with the value of contracts signed rising from between ₹80,000 crore and ₹1 trillion a year to over ₹2 trillion a year at present. “We can perhaps enhance it further,” he added.