New Delhi: The Indian government will soon unveil a policy to encourage domestic defence manufacturing and reduce imports of military equipment, Union Finance and Defence Minister Arun Jaitley said on Friday.


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"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," Jaitley said at the annual session here of the Confederation of Indian Industry (CII).


"We`re 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.


"The response that we have from domestic and international industry has been quite encouraging itself," he added.


India has targeted spending of around $250 billion by 2025 on weapons and defence equipment.


On the theme of manufacturing, Jaitley also said that at a time of protectionist trends in the developed world, India can become the leading proponent of globalisation only if the country improves on its manufacturing.


"On whether we can lead the process of globalisation, if for three years in a row we can be among the fastest growing economies in the world...on services we are among the leaders," he said.


"But the question is, can we improve our manufacturing?" 


Through various measures, the government is trying to increase the contribution of manufacturing, which has shrunk to around 15-16 per cent of India`s GDP, to around 25 per cent.