The Narendra Modi government is exploring technological and other tie-ups to help India become a defence manufacturing economy, Finance Minister Arun Jaitley said on Friday.
The new defence manufacturing policy will enable India to cut import of combat planes, ships and submarines, Jaitley said addressing an annual meeting of CII in New Delhi.
India is the world's largest arms importer, spending some 1.8 per cent of its GDP on defence. It imports about 70 per cent of defence equipment, a proposition which the government wants to change.
"We are in the advanced stages of formulating a policy where we can ensure that instead of just being buyers... on the strength of technological and other tie-ups, India also becomes a manufacturing economy," he said.
Jaitley, however, did not divulge any details of the proposed policy in works and whether it would include tax incentives and state support.
The response that we have from domestic and international industry has been quite encouraging itself, he added.
The government has pledged to spend $250 billion by 2025 on weapons and military equipment.
Jaitley had last week in US stated that the policy will help major global defence companies set up manufacturing units in the country in collaboration with Indian firms.
"Under our changed policy, we are in the future going to concentrate not merely in buying from the rest of the world, but encouraging global defence majors in collaboration with Indian companies to set up manufacturing units in India," he had stated.
With its growing global clout, India-which has topped the Stockholm International Peace Research Institute's (SIPRI) list of largest defence importers for the last seven years-is looking at self-reliance in aerospace and defence industry.
Between 2012 and 2016, India accounted for 13% of global arms imports, followed by Saudi Arabia, the United Arab Emirates, China and Algeria, said SIPRI, which tracks global arms purchases.
Between 2007 and 2011, India accounted for 9.7% of global imports, still more than any other country, the group's data show.
India's arms imports rose by 43 per cent, between 2007-11 and 2012-16. India's imports were far more in magnitude than those of its regional rivals China and Pakistan during the last four years, SIPRI said in its report released on February 20, 2017 on international arms transfer.