With “violent disturbances” in the neighbourhood posing a security challenge to the country, the Government on Wednesday vowed to rapidly modernise the armed forces and said the defence expenditure was bound to go up in the coming decades.

Inaugurating South Asia’s biggest air show Aero India 2011 at Yelahanka Air Force Station here, Defence Minister A K Antony said the IAF’s USD 11 billion Medium-Multirole Aircraft (M-MRCA) deal comprising 126 planes was likely to finalised in the next fiscal.

“India has always been a votary of peace. Yet, violent disturbances in our immediate and extended neighbourhood pose security challenges for our nation and the region as a whole,” Antony said.

The Minister said India’s democratic credentials and a fast growing economy have convinced the world that it can play a responsible and a stabilising role in the region.

“Our Government is steadfast in its resolve to meet any challenge. We are, therefore, committed to ensure rapid modernisation of our armed forces and equip them with state-of-the-art systems, equipment and platforms,” the Minister said.

Antony said, “Our current defence expenditure-2.5 per cent of its GDP, is consistent with our projected security requirements and is bound to increase over the next two decades”.

With countries pushing hard to support the bids of their companies M-MRCA deal, he said the decision to award the tender will be based on merits.

“The decision will be based on merit only…. There will be no political decision in defence acquisition process including the M-MRCA. As far as India is concerned, there will be no political decision and interference in defence acquisition process,” Antony said when asked about reports suggesting that the US was asking India to award the M-MRCA contract to one of its companies.

Two American aircraft -Lockheed Martin’s F-16 and the Boeing’s F/A-18 E/F along with European Eurofighter, Swedish Gripen, French Rafale and Russian MiG-35 are in the race for the deal for 126 fourth generation combat aircraft.

Heads of state of all the countries have visited India in the last year and pitched for the bids submitted by their companies. The list includes US President Barack Obama, British Prime Minister David Cameron and French President Nicolas Sarkozy.

Antony said the decision to award the contract was likely to be taken in the next fiscal.

Aero India 2011 took-off on an impressive note with an exquisite flying display and mid-air manoeuvres by Indian and foreign aircraft and an impressive flypast at the biennial, five-day event.

Five units of home-grown Light Combat Aircraft (LCA) Tejas, recently given initial operational clearance, stole the show with breathtaking vertical loops and mid-air manoeuvres, demonstrating their aerial agility and quick manoeuvrability.