India is planning to increase its defence budget by 50 per cent to almost $40 billion, according to defence minister AK Antony. That would make India's military expenditure three per cent of the annual gross domestic product (GDP).
During a meeting with military commanders, Antony said that India's current defence spending is lower than two per cent of GDP, where as it should at least be three per cent, though he did not specify a time frame. India had hiked its defence expenditure in the February budget by 10 per cent to $26.5 billion for the current fiscal 2008-2009. However, it still fell short of two per cent of GDP for the first time in a decade. Neighbours and rivals Pakistan and China allocate around 3.5 per cent and 4.3 per cent of their GDP to defence, respectively.
According to the defence minister, top priority needs to be accorded to the modernisation of the Indian Armed Forces, and half of the defence budget needs to be allocated for purchasing new military equipment. He said that the modernisation of armed forces has become a global trend, and therefore India too needs to adopt a new approach keeping in mind the variety of threats to its national security.
According a last year's report by the Associated Chambers of Commerce and Industry of India, over the past three years, India has spent around $10.5 billion on military imports, making it one of the largest arms importers in the developing world. India's military imports are expected to hit the $30 billion mark by 2012, given its armed forces being in the process of negotiating deals for at least 126 multi-role fighter aircraft, 155-mm howitzers, a variety of helicopters and long-range maritime reconnaissance aircraft.