Budget 2026 Gives Strategic Boost to India’s Defence Manufacturing Ecosystem

Budgetary focus: Materials science infrastructure & ecosystem including Rare Earth Corridors,
MSMEs, academic zones around industrial corridors, research & training centres, customs duty
exemption for MRO-related imports
Spokesperson: Subbu Venkatachalam, Head of Defence & Aerospace, Carborundum Universal
Limited
Quote:
In my view, today’s Budget announcement gave a timely & vital boost to the entire defence
manufacturing ecosystem. The most significant one was the recognition of critical minerals and
materials science as core enablers of strategic, frontier sectors like aerospace and defence. The
proposal to set up Rare Earth Corridors in critical mineral belts will ensure that domestic defence
manufacturers and OEMs can bank on a robust ecosystem for mining, processing, research and
manufacturing within the country.
MSMEs play a key role in manufacturing for the defence sector. Supporting them with the ₹10,000
crore SME Growth Fund and the ₹2,000 crore top-up of the Self-Reliant India Fund will not only help
them maintain liquidity and hedge risk but also enable them to augment their capabilities to
innovate for the sector.
The creation of planned academic zones around major industrial corridors along with a focus on
dedicated research and training centres will not only enable closer research-to-field collaboration &
acceleration, but also foster a workforce skilled in future tech.
Customs duty exemption for raw materials imported to manufacture MRO-related parts and the
overall push to deepen domestic manufacturing of aviation components and parts, including for
defence-related needs, is a much-needed move towards India’s Viksit Bharat and self-reliance goals.
With an expansion in the budgetary allocation towards defence, from FY 2025-26, we look forward
to a year of intense activity in every area of defence modernisation.
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