The defence budget allocated by the government for 2025–26 has been pegged at Rs 6,81,210.27 crore, of which Rs 1,80,000 crore is earmarked for capital acquisition. The government’s financial year runs from April 1 to March 31 and is used for annual financial planning and budgeting.

Budgetary allocations are broadly divided under capital and revenue heads. However sources said, emergency procurement is time bound, as a project once approved has to be signed within six months of its approval and the supply has to be completed in an year from the signing date. There are certain important cases, told the sources, which are not yet completed

Capital outlay is intended for the acquisition of new systems and equipment, as well as the creation of military infrastructure. Allocations to the armed forces under revenue expenditure (excluding salaries) are intended to meet sustenance needs and operational commitments.

The Defence Acquisition Council which is usually chaired by the Defence Minister, is the highest decision-making body for defence policy and capital procurement, and its approval of an Acceptance of Necessity (AoN) marks the first step in the acquisition process.