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"We will not compromise" on operational capabilities of the armed forces, he told the Rajya Sabha during Question Hour.
The allocation to the Defence Ministry for the current financial year has been reduced by Rs 4,903.77 crore under the revenue segment and Rs 10,000 crore under capital in the revised estimates of 2012-13.
Antony said the allocation made for defence is adequate to sustain the pace of modernisation in the current fiscal.
He said "most important procurements" of weapon systems will take place on time.
To another query, he said procurement of new fighter jets (126 medium-multirole combat aircraft) is in contract negotiation stage and "it will take some time".
Pointing out that security situation around the country is volatile, he said India has to remain careful round the clock.
He also said there was need for some amendments in the defence procurement policy to encourage indigenisation of military hardware.
