"It is a matter of serious concern for us. The main thing is we have to increase our capability -- that is the only answer," Defence Minister AK Antony told reporters in New Delhi late on Friday.
The comments followed reports China plans to accelerate supply of 50 new JF-17 Thunder multi-role combat jets to Pakistan under a co-production pact.
Antony added safe havens for militants in Pakistan is another "main concern" for New Delhi and told Islamabad to "disband and destroy" all guerrilla outfits if it "sincerely" wants to improve relations with India.
The killing of Osama bin Laden by US commandos in Pakistan has "internationally stamped the nation's position as the core of terrorist activities in the South Asian region," he said.
India has long accused Pakistan of providing shelter and support to militant groups planning attacks on Indian soil and has pushed the global community -- the United States in particular -- to censure Pakistan accordingly.
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