Nirmala Sitharaman, who was elevated to Cabinet rank today, will be the country's new defence minister.
Piyush Goyal, who was also promoted to Cabinet minister, has been allocated the railway portfolio.
"It is a very big responsibility," said Sitharaman. "Very overwhelming day. Just can't express my feeling," said Sitharaman.
She will be the country's second woman defence minister -- Prime Minister Indira Gandhi had also acted as defence minister on two occasions.
Finance minister Arun Jaitley had been holding additional charge of defence after Manohar Parrikar moved to his home state Goa aschief minister.
Goyal will replace Suresh Prabhu who had offered to resign in the wake of a string of train accidents.
Prime Minister Narendra Modi however had asked himto "wait".
Prabhu meanwhile will take over as the new commerce minister.