INDIA is planning to raise its military budget by 50 per cent to almost $40 billion, making military expenditure three per cent of the annual gross domestic product (GDP), the defense minister said, reports Indian media. "Our current defence spending is lower than two per cent (of GDP)...and it should be at least three per cent," AK Antony said at a meeting with top military commanders on Tuesday, without specifying a timeframe. India raised its defence spending in February by 10 per cent to $26.5 billion for the fiscal year 2008-2009, but it still fell below two per cent of GDP for the first time in at least a decade. India's neighbours and long-term rivals, Pakistan and China, allocate around 3.5 per cent and 4.3 per cent of GDP to defence, respectively. The minister said top priority must be given to the modernisation of the Indian armed forces and half of the defence budget should be allocated for the purchase of new military equipment. "The modernisation of armed forces has become a global trend," he said. "We must also assume a new approach taking into account a variety of threats to our national security." The Associated Chambers of Commerce and Industry of India said in a report last year that over the past three years, India had spent as much as $10.5 billion on military imports, making it amongst the largest arms importers in the developing world. India's military imports are expected to reach $30 billion by 2012 with its armed forces expected to ink defence deals for at least 126 multi-role fighters, 155-mm howitzers, a variety of helicopters and long-range maritime reconnaissance aircraft.