Tectonic deformation in the Central Indian Basin (CIB) is organized at two spatial scales: long-wavelength (~200 km) undulations of the basement and regularly spaced faults. The fault spacing of order 7--11 km is too short to be explained by lithospheric buckling. We show that the localization instability derived by Mont¿si and Zuber <2003> provides an explanation for the fault spacing in the CIB. Localization describes how deformation focuses on narrow zones analogous to faults. The localization instability predicts that localized shear zones form a regular pattern with a characteristic spacing as they develop. The theoretical fault spacing is proportional to the depth to which localization occurs. It also depends on the strength profile and on the effective stress exponent, ne, which is a measure of localization efficiency in the brittle crust and upper mantle. The fault spacing in the CIB can be matched by ne ~ -300 if the faults reach the depth of the brittle--ductile transition (BDT) around 40 km or ne ~ -100 if the faults do not penetrate below 10 km. These values of ne are compatible with laboratory data on frictional velocity weakening. Many faults in the CIB were formed during seafloor spreading. The preexisting faults near target locations separated by the wavelength of the localization instability were preferentially reactivated during the current episode of compressive tectonics. The long-wavelength undulations may result from the interaction between buckling and localization.