Mr Marles, who is on a four-day visit to India, used a speech in New Delhi on Wednesday to outline ways India and Australia can further strengthen ties.
"Australia and India are acutely aware that the security challenges we face can be magnified by the effects of climate change," Mr Marles said in the address to students and leaders at the National Defence College.
"As nations contend with growing energy demand, climate change and unstable supply chains, India and Australia's collaboration has the potential to engender security solutions for the security challenges we face."
Mr Marles said he expected a more powerful China to have a stronger say in international affairs, but it had a duty to reassure its neighbours it was not a risk to their security.
He said Beijing's military build-up had not been accompanied by effective diplomacy, forcing countries to upgrade their own defence forces in response.
"Insecurity is what drives an arms race," Mr Marles said.
"China's military build-up is now the largest and most ambitious we have seen by any country since the end of the Second World War. It is critical that China's neighbours do not see this build-up as a risk for them."
Mr Marles said large-scale military build-ups must be transparent and must be accompanied by statecraft that reassured.
"It is vital that China commits to resolving this dispute through a process of dialogue consistent with international law."
Mr Marles said the Australian government's renewed focus on climate change would play a key role in defence planning and diplomacy in the region.
He also said Australia and India would be able to work together as part of the defence, science and technology arrangement between the two nations, as well as a comprehensive strategic partnership.
"As our scientists and researchers continue to come together under our (arrangement), their endeavours will lead to benefits beyond defence," Mr Marles said.
"Our cooperation has vast potential to see us manufacture and deploy ultra low-cost solar and clean hydrogen, offering reliable access to energy for all."
Mr Marles on Wednesday met his Indian defence ministerial counterpart Rajnath Singh for bilateral talks.
The two ministers were expected to discuss defence partnerships between the countries, as well as new initiatives and issues in the Asia-Pacific region.
