Spending on the military was boosted to 1.65 trillion rupees (36 billion dollars) for the financial year to March 2012 from 1.47 trillion rupees the previous year.

"Any further requirements for the country's defence would be met," Finance Minister Pranab Mukherjee told parliament in unveiling the spending plans.

Last year's budget hiked defence expenditure by just four percent.

The latest rise comes after nuclear rivals India and Pakistan earlier this month agreed to resume peace talks suspended more than two years ago when Islamist gunmen killed 166 people in Mumbai.

India, which has fought three wars with Pakistan since independence in 1947 and had a brief war with China in 1962 over an unresolved border dispute, has emerged as the largest weapons buyer among emerging countries.

International consultancy firm KPMG estimates New Delhi will hand out military contracts worth $112 billion by 2016.

This year's increase in defence spending comes as the government is looking to finalise big-ticket deals to procure 126 combat aircraft, 197 light helicopters and the 145 ultra-light howitzer artillery guns for the army.

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