(A) is wrong as the passage says that if we can cut our defence expenses we can find peace or Building of weapons systems by us will instigated our neighbours to wage wars against us is a false propogation.

(B) is correct as the passage supports weapon-building by India. It can also be inferred from the passage that India wants to establish peace with our neighbours. So ‘weapon –building would lessen the possibility of armed conflict with our neighbour’s is the most valid assumption.

Although (C) is also an assumption but use of the words ‘state of the art’ and ‘national security does not make it the most valid assumption.

(D) is an inference but not an assumption.

Hence option-B is the answer