Stockholm/New Delhi, June 10 (IANS) China and India are the world’s largest importers of military hardware and are ranked third and 10th respectively among the countries with the highest defence expenditure in 2007, a Sweden-based peace institute says. India spent $24.2 billion or two percent of the world market share on its military last year, while China spent $58.3 billion or five percent of the global share, the Stockholm International Peace Research Institute (SIPRI) said in its annual yearbook released in Stockholm June 9.

In India’s case, 30-35 percent of its total defence expenditure was on imports of military hardware, analysts in New Delhi said. In the case of China, the figure would be closer to 50 percent, they added.

India also exported military hardware, the bulk of it of the non-lethal variety, worth $3.5 billion during 2006, the report says.

The US accounted for 45 percent of last year’s global military expenditure of $1.339 trillion, SIPRI said, adding that the global increase was six percent in real terms over that of 2006.

With the Indian armed forces embarking on an extensive modernisation drive, Indian Finance Minister P. Chidambaram Feb 29 hiked the defence expenditure for fiscal 2008-09 by 10 percent to Rs.1,056 billion ($26.5 billion) - and promised even more funds if these were required.

The allocation accounts for 14 percent of the government’s total spending of Rs.7,508 billion ($188.7 billion) during the fiscal beginning April 1. Of the total allocation, Rs.480 billion ($12 billion) has been earmarked for the purchase of hardware and Rs.579 billion ($14.5 billion) for the three services and for R&D.

With 70 percent of the hardware in the armed forces’ inventory of foreign origin, this means the country would import Rs.336 billion ($8.4 billion) worth of arms, armaments and equipment during the current fiscal.

In January, India signed its biggest defence deal so far to purchase six Lockheed Martin C-130J Super Hercules medium transport planes for a little over $1 billion (Rs.40 billion).

Last month, the Indian Air Force (IAF) opened responses to a global tender for 126 medium multi-role combat aircraft in a deal that is valued at $10 billion (Rs.400 billion). The evaluation process till the contract is finally signed is likely to take six years.

Indian officials are also renegotiating a $1.5 billion deal for purchasing an aircraft from Russia, saying they might have to accede to the demand for an additional $1.2 billion as the original deal was flawed.

Indian defence ministry officials say imports of military hardware will rise steadily and estimate these at Rs.155 billion ($3.8 bilion) over the next five years.