India's defence minister has approved a framework for building the country's most advanced stealth fighter jet, the defence ministry said on Tuesday, amid a new arms race with Pakistan weeks after a military conflict between the neighbours.

Indian state-run Aeronautical Development Agency, which is executing the programme, will shortly invite initial interest from defence firms for developing a prototype of the warplane, envisaged as a twin-engine 5th generation fighter, the ministry said.

The project is crucial for the Indian Air Force, whose squadrons of mainly Russian and ex-Soviet aircraft have fallen to 31 from an approved strength of 42 at a time when rival China is expanding its air force rapidly. Pakistan has one of China's most advanced warplanes, the J-10, in its arsenal.

The militaries of nuclear-armed neighbours India and Pakistan faced off in four days of fighting this month, which saw the use of fighter jets, missiles, drones, and artillery by both sides before a ceasefire was announced by US President Donald Trump.

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It was the first time both sides utilised drones at this scale, and the South Asian powers are now locked in a drones arms race, according to Reuters' interviews with 15 people, including security officials, industry executives, and analysts in the two countries.

India will partner with a domestic firm for the stealth fighter programme, and companies can bid independently or as a joint venture, the defence ministry said in a statement, adding that the bids would be open for both private and state-owned firms.

In March, an Indian defence committee had recommended including the private sector in military aircraft manufacturing to shore up the capabilities of the Indian Air Force and reduce the burden on state-owned Hindustan Aeronautics Ltd, which makes most of India's military aircraft.

Air Chief Marshal Amar Preet Singh has previously criticised Hindustan Aeronautics for slow delivery of light combat Tejas aircraft, a 4.5 generation fighter, which the firm blamed on slow delivery of engines from General Electric due to supply chain issues faced by the US firm.