India's military hardware and software imports are expected to touch Rs 120,000 crore ($30 billion) by 2012 as armed forces are likely to ink defence deals for multi role fighter jets, 1.55 mm howitzers, helicopters and long range maritime spy aircraft.

In the past three years, India have spent about $10.5 billion on military hardware and software, making it the largest arms importers in the developing world, the industry body Assocham said in a paper on Avenues for Private Sector Participation in Defence.

The paper said with ever increasing demand for allocation to defence budgets and limited capacity of the government to meet this demand, the defence sector requires a re-look to procure its goods and services from existing allocations in a more efficient manner.

"Indian military budget was about Rs 80,000 crore ($20 billion) in last fiscal and is expected to grow 7 per cent annually over next five years. The country's military spend is about 2 per cent of GDP without accounting spend on defence pensions, paramilitary forces and defence ministry as part of budgeted defence expenditure, Assocham President Venugopal Dhoot said in a statement.

The paper said without more private sector participation in all defence related deals and imports, it would be difficult for the defence ministry to achieve its target of 70 per cent self reliance in manufacturing defence equipments.

Some of key non-PSU industry participants supplying defence equipment and services include Mahindra & Mahindra, Tata Group, Kirloskar Bros, Larsen & Toubro, Ashok Leyland [Get Quote], Jindal, Max Aerospace & Aviation and Ramoss India.
The corporate houses could make equipments to meet domestic defence requirement provided supplies are sought from them by involving their role through bidding process.