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The rapid advancement of artificial intelligence in recent years has significantly altered the strategic landscape and character of warfare. Military institutions are extensively exploring various aspects to fortify security, recognizing AI as a pivotal technology reshaping the nature of confrontations. Within the Indian defense sector, there’s been proactive involvement in assimilating artificial intelligence. This strategic incorporation of AI within India’s military framework will distinctly influence Pakistan’s assessment of potential threats thereby impacting deterrence dynamics at both conventional and nuclear level. The paper applies the Deterrence Theory. This theory posits that the possession of superior military capabilities can dissuade adversaries from initiating conflict. In the context of AI integration, the paper aims to explore how advancements in AI bolster India’s deterrence posture vis-à-vis Pakistan and militarization of AI by India will impact the deterrence equation and stability dynamics in the region. Moreover, this also might disturb the equilibrium enhancing the likelihood of conflict between two states. By exploring the possible impact of militarization of AI by Indian defense sector, the paper founds that AI militarization can alter the balance of power dynamics impacting the strategic stability and stability-instability paradox between India and Pakistan. Qualitative research methodology has been used for comprehensive analysis of existing literature on AI’s role in modern warfare, coupled with an examination of research work on militarization of AI in South Asia. The aim is to delineate the repercussions of Indian AI militarization on the power dynamics of South Asia and deterrence equation. Thus, by examining the key domains of Indian AI militarization, this paper suggests that to keep pace with India’s technological advancement, Pakistan should undertake the policy of quid-pro-quo since it cannot afford to delay the integration of AI in its defense sector contemplating it as a national security concern for Pakistan.