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China and India have long-standing border disputes in the Himalayas, but have publicly vowed to tackle their differences through peaceful negotiations rather than conflict.
"The modernisation of armed forces in China and its ever-increasing military spending is a matter of serious concern," A.K. Antony told reporters at a security conference in New Delhi.
"But we are not unduly worried because we also will have to modernise and strengthen our armed forces."
India has beefed up its military presence along the China border with thousands of extra combat troops, armour and expanded airbases.
India says China is illegally occupying 38,000 square kilometres (15,000 square miles) of its northwestern territory, while Beijing claims a 90,000-square-kilometre chunk of the Indian state of Arunachal Pradesh.
India and China have held several rounds of inconclusive talks to resolve the dispute, which led them to a brief but bitter war in 1962.
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