Union Budget 2025: Rs 6,81,210 Crore Expenditure Announced For Defence Sector; Defence Stocks To Watch In Upcoming Trading

In the 2025 Union Budget, Finance Minister Nirmala Sitharaman announced a significant allocation of Rs 6,81,210 crore for the defence sector.

In the 2025 Union Budget, Finance Minister Nirmala Sitharaman announced a significant allocation of Rs 6,81,210 crore for the defence sector. This substantial funding underscores the government's commitment to strengthening India's defence capabilities. A large portion of this budget, Rs 4,91,732 crore, is designated for major defence items. This represents 8% of the total budget, indicating the importance of defence spending in the government's priorities. The focus of this allocation is on "Make in India" and "Aatmanirbharta," aiming for self-reliance in defence production.  

The 2025 defence budget shows a slight increase from the Rs 6.21 lakh crore allocated in the first full budget of Modi 3.0 last year. Within the Rs 6,81,210 crore, Rs 180,000 crore is specifically allocated for Capital Outlay on Defence Services, contributing to a total capital outlay of Rs 1,92,387 crore. Revenue expenditure, which includes salaries and pensions, is set at Rs 4,88,822 crore, with Rs 1,60,795 crore earmarked for pensions alone. Breaking down the capital expenditure further, Rs 48,614 crore is allocated for aircraft and aero engines, Rs 24,390 crore for the naval fleet, and Rs 63,099 crore for other equipment.  

While the 2025 allocation is substantial, it's important to note the trend. In the 2024-25 fiscal year, the defence budget was Rs 6,21,940 crore, with a capital outlay of Rs 1,72,000 crore. Although India has made strides in domestic defence production, reaching a record Rs 1.26 lakh crore in 2024 and exports of Rs 21,083 crore, the capital expenditure as a percentage of the total budget remains a point of discussion. In FY25, only 27.66% of the budget is allocated to capital expenditure, prompting calls for increased investment in Research and Development (R&D) to maintain a competitive edge, especially in emerging technologies.  

The budget also addresses other critical areas beyond defence. Sitharaman announced tax exemptions for annual incomes up to Rs 12 lakh and restructured tax slabs to benefit the middle class. Six new schemes were introduced to tackle unemployment and boost crop productivity, demonstrating a focus on economic growth and rural development. In agriculture, initiatives like the Prime Minister Dhan-Dhaanya Krishi Yojana will focus on improving productivity and infrastructure in 100 districts. A five-year mission will support cotton farmers, and a national mission on high-yielding seeds will drive agricultural advancements.  

In addition to the defence budget, the government has allocated funds for related areas. Rs 6,500 crore is designated for strengthening border infrastructure, Rs 7,651.80 crore for the Indian Coast Guard, and Rs 23,855 crore for the DRDO (Defence Research and Development Organisation). These allocations reflect a comprehensive approach to national security, encompassing border protection, maritime security, and technological advancements in defence. The increased Kisan Credit Card loan limit from Rs 5 lakh to Rs 7 lakh will benefit farmers, fishermen, and dairy producers, further supporting the rural economy.

 Following is the list of defence stocks to keep under the radar in the upcoming trading sessions: -

(* Last traded price or LTP is as of January 31, 2025 closing price)

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Disclaimer: The article is for informational purposes only and not investment advice.