India must speed up modernization of its army and air force in the face of China's military threat and Pakistan's backing of Taliban groups, an official says.

The country has been slow to build up defensive forces along its northern borders to counter China's "military assertiveness," Indian Defense Minister A.K. Antony said during his presentation at a closed-session army commanders' conference this week.

The Times News Network reported Antony saying China has been developing its military infrastructure along the 2,520-mile Line of Actual Control, a cease-fire border demarcation agreed with India.

China also has been building up relations with Pakistan, a country that continues its "anti-India stance" and its "obsession" with occupying India's neighboring Jammu and Kashmir state, Antony said.

Pakistan is "a unique threat" because of its rapidly growing nuclear arsenal coupled with its military modernization thanks to help from China and the United States.

India is concerned that a Chinese company won the contract to run Pakistan's deep-water port of Gwadar -- further evidence of a deepening Pakistan-China axis, Antony said.

Pakistan bought the Gwadar Port enclave on Pakistan's Baluchistan province coast from Oman for $3 million in 1958.

The port previously was run by Port of Singapore Authority before state-run Chinese firm China Overseas Port Holding Co. won the contract in last month.

Pakistan also is waging a proxy war on India by supporting many terrorist groups operating in Jammu and Kashmir, he said.

India and Pakistan agreed the Kashmir cease-fire line in 2003 although Pakistan claims all the Kashmir region of India's Jammu and Kashmir state, which is around 60 per cent Muslim -- India's only Muslim majority state.

The Kashmir area was divided when the British colonial power quit the subcontinent in 1947, creating the two countries that went to war over the dispute for a year.

The two armies face each other across the Indian-made 340-mile Line of Control, a double-row electrified fence including concertina up to 12 feet high.

Antony said that India, to counter Chinese and Pakistani threats, progressively is basing its Sukhoi-30MKI fighters in the north-east and the navy is bolstering force-levels on the eastern seaboard.

But Antony also said the army's nearly $15 billion plan to raise a mountain strike corps with associated structures is yet to take off, the TNN report said.

Last year India increased its defense budget by 17 percent to around $40 billion for 2012-13, partly because of major acquisition plans.

Extensive upgrades are planned or underway at ordnance factories and bases.

The premier purchase for the military has been the medium multirole combat aircraft contract for 126 Rafale fighter jets from French manufacturer Dassault, a deal worth up to $20 billion over several years.

But this month the deal hit the buffers over responsibility for quality control with Indian partner state-run Hindustan Aeronautics Ltd.

HAL is to produce under license at its works in India 108 of the twin-engine delta-wing Rafale jets.

Final contract negotiations have stalled over Dassault wanting two separate contracts.

Dassault proposes the Indian Defense Ministry has as a separate deal with HAL which would distance the French company from quality control issues should the military find HAL-produced aircraft less than satisfactory.

Last month Antony warned the government's defense businesses to make sure the long-awaited Tejas Light Combat Aircraft is ready no later than 2014.

The single-engine, single-pilot Tejas, being manufactured by HAL, was given the green light by the government in 1983 but it wasn't until 1988 that more concrete designs were on the drawing board.

Delays ensued, including issues over the design and performance of the intended Kaveri engine, a partnership deal between India's state-run Defense Research and Development Organization and Snecma of France.

A Tejas prototype eventually flew for the first time in January 2001 -- but with a U.S.-made General Electric F-404 engine as a stop-gap.

A long-term deal with GE for 99 engines -- likely the upgraded 414 -- worth $800 million was signed this year because of further delays to development of the Kaveri engine. GE won over Eurojet's EJ-200 engine, a report by the Deccan Herald newspaper said.