India Union Budget 2026-27 — INR 1,540.05 crore equity infusion into seven Ordnance Factory Board-successor defence PSUs

Mechanism

Ordinary annual budget re-capitalisation, not a new scheme: the seven entities are the corporate successors to the 41 former Ordnance Factory Board production units, split into seven defence PSUs effective 1 October 2021. Each year's Demand for Grants under the Ministry of Defence's Capital Outlay on Defence Services (Demand No. 21) carries a line item ("C. Investment in Public Enterprises") funding each PSU's equity capital from the Consolidated Fund of India. The FY2026-27 Budget Estimate of INR 1,540.05 crore is essentially flat versus the FY2025-26 Revised Estimate of INR 1,582.02 crore, with Munitions India (ammunition/explosives) and Advanced Weapons and Equipment India (small arms/heavy weapons) continuing to receive the largest allocations by far.

Severity is set low (2) because this is routine, pre-existing state-owned enterprise capitalisation with no new policy mechanism, trade barrier, or market-access change — it is filed for register completeness on India's defence-industrial base financing, not because it represents a material shift in trade/investment conditions.

Downstream implications

• Confirms continued state ownership and direct budgetary support for

India's post-OFB ordnance-manufacturing PSUs rather than privatisation.

• Munitions India Limited and Advanced Weapons and Equipment India Limited

remain the two dominant recipients, consistent with India's ammunition and small-arms self-reliance push under the broader Atmanirbhar Bharat defence-manufacturing agenda.

Open questions

• Whether any of the seven PSUs face IPO/disinvestment plans that would

supersede continued equity infusion in future budget cycles.