Taiwan on Thursday unveiled a fleet of upgraded fighter jets built domestically, with President Ma Ying-jeou hailing the rapid modernisation of the island's forces despite warming ties with China.

A dozen Indigenous Defence Fighters (IDFs) with advanced combat capabilities were displayed at a ceremony at a military base in the southern city of Tainan.

The IDFs are capable of carrying "smart" bombs developed under a project codenamed "Wan Chien" (Ten Thousand Swords) and are equipped with superior flight control systems, officials said.

"The bomb is as good as the US weapon of its kind," said Ma, who presided over the ceremony and later raised a toast at the base to laud the island's defence modernisation efforts.

The island began developing its own smart weapons after the United States -- Taiwan's main arms supplier -- refused to sell them guided bombs.

"With the new bombs, we could launch the weapons from a long distance away from the enemy targets and reduce the risks of having to fly over the mainland," air force official lieutenant colonel Huang Kuan-cheng told reporters.

Taiwan launched an upgrade programme two years ago to boost the combat capabilities of its 127 IDFs, named Ching Kuo after a former president.

A total of 71 IDFs have completed the first phase of the upgrade project, while the remaining will be upgraded by early 2017, the defence ministry said.

Ties between Taiwan and its giant neighbour have improved significantly since the Beijing-friendly Kuomintang government took power in Taipei in 2008. Ma was re-elected in January 2012.

However, China still considers the island part of its territory awaiting reunification, by force if necessary, prompting Taipei to seek more advanced defence weaponry mainly from the United States.