India announced a double-digit increase in its annual defence budget Wednesday with an eye on its increasingly assertive geopolitical rival China, with which it shares a tense and disputed northern border.

New Delhi -- already the world's third-biggest military spender according to the Stockholm International Peace Research Institute -- will increase its expenditure to $73 billion, a 13 percent rise, finance minister Nirmala Sitharaman told parliament in her budget announcement.

Relations between the world's two most populous countries are strained over border, trade and technology disputes, and India has tried to decouple itself from Chinese supply chains since a deadly frontier military clash in Ladakh in 2020.

Prime Minister Narendra Modi's government has been building up its military, including its border defences and armaments industry, with a nuclear-powered submarine of its own, and also unveiled its first locally made aircraft carrier last year -- milestones Beijing passed years ago.

India still relies on longstanding partner Russia for most of its arms imports -- other suppliers include the US, France and Israel -- and Sitharaman told parliament the government was committed to promoting self-reliance in military equipment.

Domestic procurement would go up by 10 percentage points to 68 percent, she added.

The allocation to defence is more than 13 percent of the total government budget, Defence Minister Rajnath Singh tweeted.

India has also become increasingly assertive in its efforts with multilateral groupings such as the so-called Quad.

India joins Japan, Australia and the United States in the alliance, which is a grouping of regional powers increasingly concerned about China's military and economic influence.

The country participated in its first joint fighter jet exercise with Japan in January as the two countries -- which both count China as a neighbour -- upgrade defence and security ties.