In an address to the top commanders of the Army, she said enhancing capacity of the Army was a major focus of the government and promised close monitoring of improving strategic infrastructure.
"She conveyed admiration of the nation for the professionalism of the Indian Army during events like Dokalam standoff, response to natural disasters and keeping the situation of insurgency in the North East states fairly under control," the Army said in a statement.
In her around half-an-hour-long address, the defence minister also referred to her visits to the forward areas and called the meeting with the troops as "eye-opening".
Sitharaman said keeping morale of forces at the highest level was among the priorities of the government.
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Welcoming Sitharaman, Army Chief Gen Bipin Rawat told the commanders about the extensive travel undertaken by her to forward posts including Siachen.
"He also expressed pleasure on the fact that Sitharaman had already travelled extensively in border areas of the North-East and also across the border in Tibet," the Army statement said.
Sitharaman had visited various forward areas along the Sino-India border, including Nathu La in Sikkim, on Saturday.
The defence minister said modernisation of the Army was a priority for the government and that all the "deficiencies" will be addressed to strengthen its combat capability.
Sitharaman also assured the Army commanders that all service related matters will be resolved. In this regard, she talked about long pending force modification requests, welfare of serving army men and their families.
"She called upon Indian Army to continue leveraging its strength in diplomatic defence cooperation with neighbourhood and in the region," the Army said.
The Northern Command, the Central Command and the Western Command made presentations today on a range of issues having a bearing on the field formations of the Army.
In its presentation, the Northern Command highlighted the security situation in Jammu and Kashmir.