"India remains conscious and watchful of the implications of China's increasing military profile in our immediate and extended neighbourhood and its development of infrastructure in the border areas.
"India is also taking necessary measures to develop the requisite capabilites to counter any adverse impact on our own security," the defence ministry has said in its annual report.
The report states that the unresolved boundary dispute between the two countries is a major factor in India's security calculus.
Also, against the backdrop of China's dispute with Japan over island territories and its objection to maritime traffic in the South China Sea, the ministry has said that the tensions in Asia-Pacific have created tensions in the region and are threatening to polarise the regional community.
The ministry has said that India has important political, economic and social interests in the Asia-Pacific region and has stakes in its enjoying continued peace and stability.
"India supports freedom of navigation in international waters and the right of passage as per international laws. India's view is that all countries must exercise restraint and resolve issues diplomatically without the threat of use of force," it said.
On the regional security situation, the report said the scenario in South Asia "continues to be dynamic, with terrorism, insurgency and sectarian conflict emerging from our immediate neighbourhood increasingly threatening regional stability".
India is committed to building an open, dialogue-based security cooperation with all partners in the neighbourhood on the basis of equality and mutual benefit and respect, the ministry added.
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