Indian policymakers have long been wary of a string of strategically located ports being built by Chinese companies in its neighbourhood, as India beefs up its military clout to compete with its Asian rival.
Management of Gwadar port was handed over to state-run Chinese Overseas Port Holdings last week after previously being managed by Singapore's PSA International. "It is a matter of concern to us," Indian Defence Minister AK Antony told reporters when asked about Chinese control of the port.
When complete, the port, which is close to the Strait of Hormuz, a key oil shipping lane, is seen opening up an energy and trade corridor from the Gulf, across Pakistan to western China, and could be used by the Chinese Navy, analysts say.
"It will enable (China) to deploy military capability in the region," said Jay Ranade, of the Centre for Air Power Studies and a former additional secretary at the government of India.
"Having control of Gwadar, China is basically getting an entry into the Arabian Sea and the Gulf."
China has also funded ports in Hambantota, Sri Lanka, and Chittagong in Bangladesh, both India's neighbours. "Gwadar is a more serious development than the others," Ranade said, as the Pakistani port gives China base facilities.
A Pakistani foreign ministry official told Reuters that the port was none of India's business.
"India has no concern with whoever Pakistan decides to work with on Gwadar," said the official, who declined to be identified. "We first had a deal with Singapore but that didn't work out as desired. Singapore's PSA International and the Chinese have settled the deal."
Chinese Foreign Ministry spokesman Hong Lei said last week that Gwadar was a commercial project, part of long-standing bilateral cooperation. "China will actively support any programme that benefits China-Pakistan relations and the prosperity of Pakistan," he told reporters.
India, the world's biggest arms importer in recent years, plans to spend around $100 billion over the next 10 years in upgrading its mostly Soviet-era military hardware to keep pace with China's ramping up of defence spending.
The country was bound to modernise its armed forces in response to China's own modernisation, Indian Defence Minister Antony said at an air show in the southern city of Bangalore, adding that strengthening its north-eastern border with China was not a confrontation with its neighbour.