India on Saturday finalised a policy that would allow local private companies to work with foreign players to make high-tech defence equipment, in a boost to Prime Minister Narendra Modi's bid to cut reliance on imports.

The policy, whose finer details are still to be formalised, will initially allow the entry of private companies into the manufacture of submarines, fighter aircrafts and armoured vehicles through foreign partnerships, a statement issued by the Defence Ministry said.

"In future, additional segments will be added," the statement said.

Industry experts have said that delays in finalising procurement policies have undermined India's efforts to get local, largely inexperienced, companies to tie up with foreign manufacturers, a necessary step if domestic firms are to utilise the latest technology.

Prime Minister Modi has vowed to reverse India's dependence on imports by building a local manufacturing industry. The government is forecast to spend $250 billion on modernisation of its armed forces over the next decade.

The policy, announced on Saturday, would allow Indian companies to partner with global defence majors "to seek technology transfers and manufacturing know-how to set up domestic manufacturing infrastructure and supply chains," the statement said.

Foreign manufacturers such as Lockheed Martin, Boeing, BAE Systems and Saab are looking to India as one of the biggest sources of future growth.