Indian military modernization and its implications have been a major debate in the South Asian security calculus. The strategic dynamics of South Asia reflect divergent priorities and goals for India and Pakistan. For India, military modernization aims towards regional hegemony, while for Pakistan, it is a source of strategic stability. In the given context, this study examines how the ongoing trends in India’s military modernization are exacerbating the security dilemma in South Asia and examines Pakistan’s responses to establish arms parity. The findings reveal that while Pakistan primarily relies on credible minimum deterrence, it recognises the need to modernize its conventional military capabilities. Whereas India theoretically adheres to a two-front war strategy, its main military build-up and capabilities are Pakistan-centric. Further, this research also examines the role of great powers i.e., the United States, Russia, France, and China, as major providers of military hardware for their respective strategic interests in the region. This study concludes Indian Military Modernization and the ensuing arms race pose a challenge to strategic stability in South Asia. India’s aim to fight a conventional war through its military modernization under a nuclear shadow has made South Asia the most dangerous nuclear flashpoint.