Associated Chambers of Commerce and Industry (Assocham) requested the union government to allow 49 per cent foreign direct investment (FDI) in the defense sector. Current FDI ceiling in defense sector is 26 percent. The industry body said in a paper submitted to the Union Defense Ministry that defense import is expected to rise by
2012. The country should work toward self-reliance in defense production which is possible only by increasing FDI limit to 49 per cent in the defense sector.

Secretary General of ASSOCHAM, D. S. Rawat said, "If the Indian economy continues to grow at current momentum, Indian defense spending is projected to increase from
2.8 to 3 percent of the GDP (gross domestic product) in the future and this increase would be used to finance additional capital outlays for modern equipment."

The current defense market for private sector firms in India is about $700 million. The country imports military hardware worth $6 billion from US and western countries. India can procure technical and manufacturing potential by increasing the participation of private firms in defense deals. Private companies are currently supplying around 20 percent to 25 percent of components and sub-assemblies to state-owned companies.