Inaugurating the 10th edition of the Aero India 2015 here, Modi said: "We do need to increase our defence preparedness. We do have to modernise our defence forces."
"We have to equip ourselves for the needs of the future, where technology will play a major role," he said.
Describing it as the "largest ever" Aero India, Modi said it reflected a "new level of confidence within our country and global interest in India". He added it was a "mega meeting" of one of the largest global supply chains with the most advanced technology and complex equipment.
Modi said the government was focusing on developing India's defence industry with a sense of "mission".
"This is why it is at the heart of the Make in India programme," he said.
"Have introduced significant reforms in our offsets policy. I am acutely aware that it still needs a lot of improvements. Will pursue them," he added, while also expressing confidence that India would emerge as a "major global centre for defence industry".
"A strong Indian defence industry will not only make India more secure, it will also make India more prosperous," he said.