India has announced a historic budget boost for infrastructure and defence, Finance Minister Nirmala Sitharaman revealed in parliament on Sunday.
The government will allocate $133 billion (€112 billion) for infrastructure, a 9% increase from last year, and $85 billion for defence, marking a 15% rise in military expenditure.
The budget aims to strengthen domestic manufacturing across seven strategic sectors: pharmaceuticals, semiconductors, rare earth magnets, chemicals, capital goods, textiles, and sports goods. Sitharaman emphasised that India will continue its journey toward Viksit Bharat (Developed India) while maintaining inclusive growth.
Prime Minister Narendra Modi underlined the country’s ambitions: "India is not content with simply being the fastest-growing economy. We aim to become the world's third-largest economy. This budget provides a roadmap to boost domestic manufacturing and self-reliance."
The defence allocation follows a four-day conflict with Pakistan in May 2026, during which drones, missiles, and artillery were extensively deployed. Defence Minister Rajnath Singh described the budget increase as “unprecedented,” ensuring the armed forces receive new fighter jets, drones, naval ships, submarines, and other critical equipment.
Infrastructure plans include seven high-speed rail corridors connecting major cities such as Mumbai, Bengaluru, Hyderabad, Pune, and Chennai. The corridors aim to promote environmentally sustainable passenger transport and accelerate economic growth.
Sitharaman also announced initiatives to develop “rare earth corridors” in Tamil Nadu, Kerala, Odisha, and Andhra Pradesh, harnessing mineral-rich regions for industrial growth. The government will support data centres and artificial intelligence, offering a tax holiday until 2047 for foreign companies providing global cloud services from India.
The 2026–2027 budget underscores India’s dual strategy: enhancing national security while building a self-reliant, technologically advanced economy.
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