Defence ministry eyes ₹2 lakh cr in new orders this fiscal, targets capex at 2.5% of GDP by FY26: Report

The government is looking to ramp up capital expenditure on defence to 2.5% of GDP by FY2026, up from the current 0.5%, Singh said.

"Right now, defence spending overall is at 1.9% of GDP, but capex is only a fraction of that. My view is that we need to grow capex by at least 20% CAGR annually over the next five years to reach the 2.5% target," he said.

In the Union Budget for FY26, the Ministry of Defence was allocated ₹6.81 lakh crore—13.45% of the total budget.

Of this, ₹1.8 lakh crore was marked for capital outlay, up 4.65% over the previous year.

The bulk—₹1.48 lakh crore—is set aside for capital acquisitions.

Singh said the ministry plans to maintain this momentum with another ₹2 lakh crore in contract signings this fiscal, ensuring that a majority of these contracts go to Indian defence manufacturers.

In addition to capital spending, ₹3.11 lakh crore was earmarked for revenue expenditure such as salaries and maintenance.

Defence pensions received ₹1.61 lakh crore, while the DRDO was allocated ₹26,816 crore, reflecting a 12.4% year-on-year rise.