India has become the world's fourth largest spender on defence, following a 13.1 percent increase in its 2016-17 defence budget, according to IHS Inc, the leading global source of critical information and insight. India's climb in the rankings - from sixth position last year - is a result of an increase in expenditure to $50.7 billion combined with cuts to military spending by other countries, namely, Russia and Saudi Arabia, where low oil prices have put considerable strain on their finances.

"Growth in the Indian budget is expected to outpace that of all other major defence spenders over the next five years. This position is only likely to strengthen further," said Craig Caffrey, Principal Analyst at IHS Jane's.

According to IHS analysis, short-term pressures, caused by increases to military pay and the introduction of One Rank, One Pension (OROP), are the main reason for the higher rate of budget growth. As a result, spending on the acquisition of military equipment remained largely static in real terms and remains lower than its 2013-14 peak, despite an increase in the overall budget.

"There are definitely strains with regards to the 2016-17 defence budget, not least that last year's medium-term guidance suggested India would see a growth of 17-18 percent this year. The pressure on the capital budget will be the main concern from the perspective of both domestic and foreign defence suppliers," said Caffrey.

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