Defence Ministry proposes foreign collaboration for manufacturing arms

India now has the fourth-largest defence budget in the world.

In order to modernize its aging defence forces, India needs to spend $130 billion over next seven years.

A report by HIS Markit predicts that by 2018 India's spending will overtake Britain's to become the third-largest defence spender.

Defence spending is expected to rise from $50.7 billion in 2016 to $64 billion in 2020.

According to a new report, India is now the 2nd largest arms purchaser amongst all developing countries worldwide.

It is preceded only by Saudi Arabia.

The report was released by an independent and bipartisan research wing of the US Congress, Congressional Research Service (CRS).

CRS prepares reports on a wide variety of issues for lawmakers however they aren't considered official reports of US Congress.

According to the CRS report, during the period of 2008 - 2015, Saudi Arabia was the largest arms purchaser in the world.

Its defence agreements amounted to a total of USD 93.5 billion.

During the same period, India's defence purchases cumulatively amounted to USD 34 billion, a distant second from Saudi Arabia.

India has been shoring up defence acquisitions to modernize its armed forces.

The CRS report shed light on India's key defence acquisition and its attempts to diversify.

India has principally procured arms from Russia but started to diversify a decade ago.

In 2004, it purchased Phalcon - an early warning system from Israel and signed a deal for six Scorpene submarines with France in 2005.

In 2010, India purchased 57 Hawk jet trainers from the UK.

The CSR report stated that India was evidently reducing its reliance on Russia for procuring arms.

In 2011, India eliminated Russia from a competition to acquire new-generation combat fighter aircraft: France subsequently won this deal.

The report observed that India was veering towards other major weapons suppliers and Russia could no longer be assured of India as a consumer of its major combat systems.

The Defence Ministry has proposed the manufacturing of top-of-the-line fighters, warships and battle systems under 'Make in India.'

This proposal suggests a collaboration between Indian and foreign arms manufacturers.

According to sources in the ministry, the proposed "strategic partners" policy would invite long-term tie-ups and a complete technology transfer.

There exists an offset clause for defence purchases that require foreign firms' investments.