While India's spending has remained relatively constant in the last 10-15 years compared to its GDP, China's has significantly ramped up defence budget during the period.
Currently, the Centre-state formula for resource sharing as drawn up by previous finance commissions is 58:42.
The Inter Services Public Relations (ISPR) said that voluntary cuts in the defence budget for a year would not be at the cost of defence and security.
Last month, the government announced that all civil and military institutions would contribute to the austerity-oriented federal budget for 2019-20.
With this year's increase, China's defence spending moved closer to the USD 200 billion mark, making it the highest spender on defence after the United States.
Interim Finance Minister Piyush Goyal said that the defence budget will be crossing Rs 3,00,000 crore for the first time in 2019-20.