Defence imports likely to touch $30bn by 2012: Assocham report

New Delhi: India's military imports are expected to reach a whopping $30 billion by 2012 with its armed forces expected to ink defence deals for multi role fighter jets, 155mm howitzers, a variety of copters and long range maritime reconnaissance aircraft over the coming years.

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) have made these projections in a report on `Avenues for Private Sector Participation in Defence'. The report points out that over the past three years, India has spent as much as $10.5 billion on military imports, making it amongst the largest arms importers in the developing world.

The report also points out that with an ever increasing demand for higher allocation for defence budgets and with a limited capacity on the part of the government to meet the demand, the defence sector needs to re-think how it could procure its goods and services from existing allocations in a more efficient manner.

According to Assocham president, Venugopal N Dhoot, the Indian military spend was about $20 billion in the last fiscal and is expected to grow 7% annually over the next 5 years.

The country's military spend amounts to roughly 2% of GDP, which is without accounting for expenditure on defence pensions, para-military forces and defence ministry itself as part of budgeted defence expenditure.

The report points out that despite the defence ministry setting a target of achieving 70% self reliance in defence production ten years ago, the country has achieved self sufficiency only to the tune of 30%.

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.

The report essentially argues that competitive bidding must be introduced for all defence tenders in order to generate greater involvement of the private sector in the defence sector and, in the process, reduce the burden of imports.