India’s imports of military hardware and software are expected to touch a whopping $30 billion by 2012 as its armed forces are expected to ink defence deals for multi-role fighter jets, 1.55mm howitzers, a variety of copters and long range maritime spy aircraft.
This projection has been made by a study conducted by the ASSOCHAM.
It reveals that in the past three years, India spent as much as $10.5 billion of military hardware and software, making it the largest arms importers in the developing world. The study, which has been submitted to the Defence Ministry by ASSOCHAM, highlights that with ever increasing demand for higher allocation to defence budgets and limited capacity of the government to meet this demand, the defence sector requires a re-look at its policy to procure goods and services from existing allocations in a more efficient manner.
Referring to the defence budget, the study notes that country’s military budget was pegged at $20 billion in the last fiscal and is expected to grow 7 per cent annually over the next 5 years. 
The country’s military expenditure amounts to roughly 2 per cent of GDP which is without accounting for expenditure on defence pensions, paramilitary forces and the defence ministry itself as part of the budgeted expenditure.

Target not met
The study suggesting larger private sector participation in all defence related deals and imports, reminds the government that despite the Defence Ministry’s targets of achieving 70 per cent self-reliance in defence production 10 years ago, it has fallen short of the target by 40 per cent as till now only 30 per cent defence production has become self-reliant.
This is despite the limited involvement of private sector granted in national defence sector. The year 2001 witnessed nod for the entry of foreign private players with 26 per cent FDI.
By 2005, there were about 5100 companies supplying around 20-25 per cent of components and sub-assemblies to state owned contractors in the defence sector, the study reveals.
Some of key non PSU industry participants supplying defence equipment and services include Mahindra & Mahindra, Tata Group, Kirloskar Bros, Larsen & Toubro, Ashok Leyland, Jindal, Max Aerospace & Aviation and Ramoss India.
India’s defence imports, the projections for which have been made at $30 billion by 2012, could be made cost effective by introducing a competitive bidding process.
Leading corporate houses like Tatas, Satyam Computers, Mahindras, Kirloskar Bros, L&T and many other companies can make defence equipment to suit and meet domestic defence requirement, provided supplies are sought from them by involving their participation through competitive bidding process, the ASSOCHAM study suggests.