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Bharat Dynamics Ltd.

Despite the Union Budget 2026-27 allocating a record Rs 7.85 lakh crore to defense, Indian defense sector shares significantly declined, surprising market experts. Companies like HAL and Bharat Dynamics saw shares fall, with the Nifty Defence Index dropping.

The defence allocation in Union Budget 2026-27 marks a 15 per cent increase over the Rs 6.81 lakh crore provided in the previous financial year (Photo - @narendramodi / X) Guwahati, Feb 1: In a push towards strategic self-reliance in defence and military, Finance Minister Nirmala Sitharaman, on Sunday, announced a record allocation of Rs 7.8 lakh crore for the defence sector in the Union Budget for 2026–27. The allocation marks a 15% increase over the Rs 6.81 lakh crore provided in the previous financial year, underscoring the government’s priority on national security amid evolving geopolitical challenges. A significant highlight of the Budget is the sharp rise in capital expenditure for defence procurement. The Armed forces have been allocated Rs 2.19 lakh crore for the purchase of military hardware, a 21.8% jump from the Rs 1.80 lakh crore earmarked in FY 2025–26. This enhanced capital outlay is aimed at accelerating force modernisation, strengthening air defence systems and inducting next-generation platforms across the Army, Navy and Air Force.

India's defence manufacturing sector sees enhanced medium-term visibility due to accelerated capital acquisition approvals, with FY26 year-to-date clearances nearly double the annual outlay. This robust pipeline, spanning diverse military needs and emphasizing integrated systems, de-risks future order inflows for the sector over the next two to four years.

As geopolitical tensions rise with the US's aggressive stance towards Venezuela, defence stocks are gaining traction in India. Experts suggest a focus on long-term growth as the government prepares to increase defence allocations in Budget 2026.