New Delhi, Feb 1 (PTI) Global and domestic defence giants on Sunday welcomed India's whopping defence outlay of Rs 7.85 lakh crore, saying it is in line with geo-strategic realities and will boost the combat prowess of the military.

The nearly 22 per cent hike in capital budget combined with the government's decision to scrap basic customs duty on components and parts for production of civilian and other aircraft is being seen by the industry as a major move.

Ankur Kanaglekar, the vice-president of Thales' India operations, said the defence outlay seeks to reinforce the nation's commitment to modernising and strengthening the armed forces.

Sashi Mukundan, Executive Vice President, Rolls-Royce India, said the basic customs duty waiver on components that also supports maintenance, repairs and overhaul services will help the aviation sector.

In her budget speech, Finance Minister Nirmala Sitharaman proposed exempting basic customs duty on components and parts required for the manufacture of civilian and other aircraft.

She also announced waiving basic customs duty on raw materials imported for the manufacture of parts of aircraft to be used in maintenance, repair or overhaul requirements by units in the defence sector.

Kanaglekar said Thales welcomes the "landmark allocation" of Rs 7.8 lakh crore for defence that represented a 15 per cent increase over the previous year, adding the outlay reflects India's commitment to modernising armed forces.

"The announcements around exemption of basic customs duty on component and parts for manufacture of civilian, training, and other aircraft and on the raw materials imported for manufacture of parts to be used in maintenance, repair and overhaul by defence sector units, further signals India's long-term strategic intent for strengthening civil aerospace and defence industrial capabilities," he said.

Kanaglekar said Thales remains committed to the 'Make in India', 'Innovate in India', and 'Export from India' strategy.

"We firmly believe that our collective efforts will strengthen India's industrial base and firmly establish the nation as a major for global aerospace and defence manufacturing," he said.

Mukundan described the Union Budget for 2026-27 as forward looking and said it focuses on Viksit Bharat.

"In aerospace and defence, the basic customs duty waiver on components that also supports maintenance, repairs and overhaul services will help the aviation sector. Similarly, the tax holiday on data centres will make India a data and AI powerhouse and encourage next-generation talent," he said.

Rolls-Royce can and will play a supportive role in all of these initiatives, he said.

Baba Kalyani, Chairman and Managing Director of Bharat Forge Ltd, said the budget reflects the hallmark of Prime Minister Narendra Modi's visionary leadership, anchored in policy continuity, fiscal discipline and a clear focus on building long-term national capabilities.

"At a time of heightened geopolitical and supply-chain uncertainty, these measures are bound to strengthen India's economic resilience and global positioning, sending a strong signal to both global and Indian investors," he said.

"Aligned with the geo-strategic realities, the defence sector emerges as a key pillar of this budget," he said.

Kalyani, referring to the allocation to the armed forces, said the emphasis is firmly on upgrading platforms, systems and technologies, while improving procurement efficiency.

"The message to industry is clear: deepen long-term capability, technology and Aatmanirbharta or self-reliance," he said.

The government set aside Rs 7,84,678 crore as defence outlay for 2026-27 as against last year's allocation of Rs 6.81 lakh crore Out of the total allocation, Rs 2,19,306 crore has been earmarked for capital expenditure to the armed forces that largely includes purchasing new weapons, aircraft, warships and other military hardware. The capital outlay is 21.84 per cent more than the budget estimates of 2025-26. PTI MPB KVK KVK

India's defence budget rises and customs duty exemption for aircraft parts aims to boost domestic aerospace manufacturing. The budget exempts basic customs duty on components and parts for manufacture of civilian and other aircraft and waives duty on raw materials imported for parts used in maintenance, repair and overhaul by defence units, as a fiscal incentive to bolster domestic aerospace production and sustainment. It also raises the defence outlay to about Rs 7.85 lakh crore with a significant increase in capital expenditure to procure new platforms and military hardware, aligning higher defence spending with measures to enhance indigenous industrial capability and procurement efficiency.