India's Prime Minister Narendra Modi attends an event to celebrate the beatification of two Indians by Pope Francis late last year, in New Delhi Thomson Reuters

NEW DELHI (Reuters) - India's government has cleared a $8 billion plan to build the country's most advanced warships, defense sources said, just months after ordering new submarines to close the gap with the Chinese navy in the Indian Ocean.

Since taking over last year, Prime Minister Narendra Modi has signaled his resolve to build a strong military after years of neglect that military planners say has left India unable to fight a two-front war against China and Pakistan.

India's navy has been rattled in recent months after Chinese submarines docked in Sri Lanka, just off its southern coast, underlining the growing reach of the Chinese navy after years of staying closer to its shores.

Modi summoned a meeting of the cabinet committee on security on Monday to approve construction of seven frigates equipped with stealth features to avoid easy detection, a defense ministry source said.

The Times of India said the government had also approved six nuclear-powered submarines for a further $8 billion. The defense source said he had no knowledge of the nuclear submarine program, which traditionally has been kept under wraps.

The frigates in a program called Project-17A will be built at government shipyards in Mumbai and Kolkata, in a boost for Modi's Make in India campaign to build a domestic defense industrial base and reduce dependence on expensive imports that have made India the world's biggest arms market.

"Project 17-A was awaiting cabinet clearance since 2012," the source said, adding the Modi government was moving quickly on a project seen as of critical national importance.

The source said the government expects to sign a contract with the shipyards within the month. Another source in the navy confirmed the cabinet clearance but said it would take a decade or even longer for all the ships to be built, even if the shipyards were to start construction immediately.

China's naval forays in the Indian Ocean have exposed the Indian navy's weak undersea defenses, which are down to 13 ageing diesel-electric submarines after a string of accidents including one in 2013 in which 18 sailors were killed.

In October, Modi's administration approved fast-tracking the tender process to build six submarines in collaboration with a foreign builder.

"This government is showing signs of urgency, but there is a lot of ground to be covered," said former vice admiral Arun Kumar Singh. "All our programs are running way behind schedule and with a huge amount of cost over-runs."

(Editing by Tom Heneghan)