He also called for "jointness at the top" and for senior military commanders to have a wide range of experience while stressing on the need for developing capabilities to win swift wars as the "the luxury of long-drawn battles" will not be there in the future.
Modi said that at a time when major powers are reducing their troop strength and relying more on technology, India is still constantly seeking to expand the size of its forces.
The prime minister, who witnessed an operational demonstration of India's naval and maritime air capabilities while attending the annual Combined Commanders Conference, said the country needs forces that are agile, mobile and driven by technology, not just human valour.
"We need capabilities to win swift wars, for we will not have the luxury of long-drawn battles. We must re-examine our assumptions that keep massive funds locked up in inventories," he said.
"Our strategic deterrence is robust and reliable, in accordance with our nuclear doctrine, and our political will is clear," he said.
Stating that the country has been slow to reform the structures within the armed forces, he added, "We should shorten the tooth-to-tail ratio. And, we should promote jointness across every level of our Armed Forces.
"We wear different colours, but we serve the same cause and bear the same flag. Jointness at the top is a need that is long overdue."
Defence Minister Manohar Parrikar, National Security Advisor Ajit Doval, all three Service chiefs and other senior officers of the army, navy and air force attended the meet where Modi was briefed about military issues.
The Combined Commanders' Conference is a forum at which India's defence policy, doctrine and operational challenges are discussed in detail.
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