EY on Budget 2025: Key amendments proposed in Union Budget 2025 for the Defense sector

The Hon’ble Finance Minister presented the Union Budget 2025 on 01 February 2025 in the Lok Sabha. We bring you the key amendments proposed in Finance Bill 2025 with respect to Defense sector.

On Saturday, 01 February 2025, the Hon’ble Finance minister, Nirmala Sitharaman, presented the Union Budget 2025 in the Lok Sabha. We bring you the key amendments proposed in Finance Bill 2025 with respect to Defense Sector.

The Union Budget 2025 reinforces India's commitment to self-reliance in Defense and national security. With a budgetary allocation of INR6,81,210 crores (~US$ 78.57 billion) for the Defense sector which marks a 9.5% increase from previous year and a capital budget of INR1,80,000 crores (~US$ 20.76 billion), reflects a strong signal towards modernization and indigenous production of light combat aircrafts and helicopters, advanced military equipment, including drones, and next-gen weaponry. This aligns with the government’s Atmanirbhar Bharat vision, reducing dependency on imports and fostering India's position as a global Defense manufacturing hub.

Another key focus is the integration of cutting-edge technologies such as artificial intelligence, cybersecurity, and surveillance systems within the armed forces. Investments in border security infrastructure and military training facilities will enhance operational readiness and preparedness for modern warfare. Furthermore, the budget places importance on the welfare of Defense personnel, ensuring better healthcare, pensions, and support for veterans. With dedicated funding towards research and development in Defense technology of around 3.93%, Budget 2025 strengthens India’s security landscape while fostering a robust ecosystem for indigenous innovation and exports in the global Defense market and also re-affirms Ministry of Defense commitment to observe 2025 as a Year of Reform.