New Delhi, India: India has cleared an $8 billion plan to build seven warships as part of a twin push to ramp up local production and counter an increasing assertive China, a defence ministry official said Thursday.

The move is seen as a way to narrow India's huge gap with China's advanced naval warfare systems while boosting Prime Minister Narendra Modi's push to manufacture defence equipment locally.

India, which is surrounded by hostile neighbours in Pakistan and China, is in the midst of a multi-billion-dollar upgrade of its ageing military hardware and recently lifted a cap on foreign investment in defence.

‘The cabinet committee on security has cleared the proposal to build seven stealth frigates at domestic shipyards,’ a source in the defence ministry told AFP of the meeting on Monday.

Four warships will be constructed at Mazagon Docks in Mumbai and the other three at Garden Reach Shipbuilders and Engineers in Kolkata.

The frigates will be equipped with stealth technology, making it harder to detect by enemy radars or other tracking systems.

The Times of India said the cabinet committee had also given the go-ahead for six nuclear-powered submarines as part of another $8 billion project when it met earlier this week.

Since his sweeping election victory in May, Modi's right-wing government has cleared several proposals aimed at revamping and renewing the country's Soviet-era military.

Modi has also worked to shore up regional alliances since he came to power in India, which has a longstanding territorial dispute with China over a remote Himalayan region.

China has also been accused of seeking to develop facilities around the Indian Ocean in a ‘string of pearls’ strategy to counter India's rise and secure its own economic interests.

The appearance of two Chinese submarines in Sri Lankan waters late last year sparked particular concern in New Delhi, which has traditionally regarded the island as being in its sphere of influence.