- Budget 2026 defence focus shifts to AI and future warfare
- Budget 2026 defence push backs Make in India and exports
Hyderabad: Budget 2026 defence priorities are expected to mark a major shift in India’s military planning as the Centre prepares to present the Union Budget 2026 in Parliament on February 1. Analysts believe the budget will act as a game changer for the defence sector. The focus comes as India moves from traditional methods of warfare to Artificial Intelligence based warfare systems.
According to the input, the budget assumes significance amid rising geopolitical tensions across the world and challenges from neighbouring countries. Therefore, large allocations for the defence sector are expected. India has recognised that future wars will not be limited to borders alone. Instead, conflicts will also play out in cyber space, outer space and AI driven domains. As a result, the government is expected to prioritise technology driven defence capabilities.
Meanwhile, the focus is likely to shift to systems where hundreds of drones work together to detect enemy movement and launch coordinated attacks. Funds are expected for the development of AI software that can take quick decisions during war and accurately hunt enemy targets. This marks a clear move towards modern warfare capabilities under the Union Budget 2026 27 framework.
Last year, the defence sector received an allocation of around Rs 6.81 lakh crore. This year, the allocation is likely to increase further. In this context, organisations such as FICCI have suggested increasing the share of ‘capital expenditure’ from 26 percent to 30 percent. Such a move would support the purchase of new weapon systems and help modernise existing platforms.
The core objective of the budget is to reduce dependence on foreign imports and strengthen indigenous defence manufacturing under the ‘Make in India’ initiative. Startups working on defence innovations are expected to receive large funding through the IDEX scheme. Along with this, defence corridors in Uttar Pradesh and Tamil Nadu will see expansion. Discussions are also underway to establish a new defence corridor in eastern India.
India has set a target of increasing defence exports to Rs 50,000 crore by 2028 29. Therefore, export incentives are likely in this budget. This becomes important as global demand rises for products such as Brahmos missiles and Tejas aircraft. At a time when leaders like Donald Trump are increasing defence spending, experts say Budget 2026 is not just a financial exercise but a ‘roadmap’ to transform India into a global defence powerhouse.
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