He said indigenisation in the field of defence equipment manufacture should have started three decades back but regretted that it had not happened and as a result India became the largest importer of military hardware.

"We have a disturbed neighbourhood and for 68 years we have allowed situation to slip...India lives in the middle of disturbed neighbourhood. In 68 years of our Independence we had several wars. We had it on two fronts," said Jaitley while addressing the students of Shri Ram College of Commerce here.

India has fought a war with China in 1962 as also with Pakistan in 1947, 1965 and 1971 besides the 1999 Kargil conflict.

Underlining the need for enhancing the military capabilities of the country, the Defence Minister said, "Our defence preparedness is the best guarantee for peace in the area. Unless we are prepared, there will no peace in (India)."

Jaitley, who also holds the Finance portfolio, said India is the largest buyer of weapons in world and this situation needs to be changed.

"Today, a large part of international diplomacy is about business and commerce," he said. Talking about his experience after becoming Defence Minister, he said, "I had umpteen number of visitors in the last three months. We discussed various issues...Their real objective is to sell aircraft or tanks or weapons to India..."

He said that India, in the past, has had "such a huge resistance to domestic manufacturers".

Jaitley said India will have to open to rest of the world and also build its own capacity.

"This is something we should have started 30 years ago. There is huge need to go ahead."

The new government has laid thrust on encouraging domestic defence manufacturing and to help this, it has raised the FDI cap from 26 percent to 49 percent.

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