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Indian Army's T-90 Bhishma tanks (front) are driving during the Republic Day parade in New Delhi, India, January 26, 2016.Reuters file

With an expenditure of $50.6 billion in 2016, India is now amongst the top five defence spenders in the world. Asia's third largest economy now has the fourth-largest defence budget, followed by Saudi Arabia and Russia, according to the 2016 Jane's Defence Budgets report.

Ahead of India are the US, China and the UK. The report says that by 2018, India will surpass the UK and become the third largest in the group.

"Procurement spending has been constrained in India over the last three years as personnel costs have increased...However, what we expect to see from 2017 onwards is a military focused on modernisation. India needs new equipment to fulfil its modernisation drive. Over the next three years, India will re-emerge as a key growth market for defence suppliers," Craig Caffrey, IHS Jane's principal analyst, said in a statement.

Globally, total defence spending increased to $1.57 trillion.

Since coming to power in May 2014, the Narendra Modi government has laid tremendous stress on ramping up the country's defence facilities. The government announced that in the last two years and the current year, it has signed 135 contracts, valued at Rs 1,91,018.78 crore with Indian and foreign vendors to acquire UAVs, ships, missiles, frigates, rockets, simulators, aircraft, helicopters, radars and rifles.

The government has also clarified that equipment requirements are conducted in a planned and progressive manner where there is a detailed process that will include "15 year Long Term Integrated Perspective Plan (LTIPP), a five-year Service-wise Capability Acquisition Plan and a two year roll-on Annual Acquisition Plan. The capital procurement of defence equipment is carried out as per the Defence Procurement Procedure (DPP)."

The Defence Ministry has further revealed the amount spent on defence imports in the last two financial years:

• Rs 32,498.97 crore in the financial year 2014-15

• Rs 30,173.09 crore in the financial year 2015-16

India, however, still needs to spend some $130 billion to modernise its military over the next seven years.