The incremental progress of the Indo-U.S. agreement on nuclear cooperation is generating increasing excitement within the US defence industry as manufacturers across the board are racing to secure contracts with the Indian armed forces. According to industry analysts, billions of dollars in defence contracts will likely become available in India over the next decade, and President Bush's emphasis on Indo- US cooperation has opened the doors for their bidding.

Nearly all the top US defence companies currently have a strategy for gaining a foothold in India. One of the biggest competitions currently underway involves India's plans to buy up to 126 new multi-role jet fighters, valued at around $10 billion. US defence company, Lockheed Martin, is pitching its F-16 fighter jet against Boeing's F/A-18E/F Super Hornet fighter, the Gripen of Swedish firm Saab, the Mig-29 from Russia, and the Rafale of France's Dassault. Lockheed, in an attempt to gain the competitive edge, is in talks with companies like the state-owned Hindustan Aeronautics Limited (HAL) and the Tata group for outsourcing production of aircraft components. If Lockheed Martin secures the contract, a majority of the jets will be built by HAL, following the transfer of technology. Lockheed also reportedly aims to outsource components for other aircrafts to India, including the successful C-130 Hercules transport aircraft.

The American firm Raytheon has already confirmed that it is ready and willing to secure US government approval to supply India with its advanced electronically active scanned array radar (AESA), which steers radar beams at nearly the speed of light and is lighter and more accurate than conventional radars. This asset would significantly boost the war-fighting capabilities of both the F-16 and F-18 fighter jets. Neither the AESA nor the F-18 have been offered to Pakistan.

American aerospace giant, Bell, claims it has almost settled an Indian Army order for 197 multi-role helicopters in a deal valued at around $500 million. Bell has also offered India assistance in developing a home grown attack helicopter. According to a Bell official, the army wants to buy 60 helicopters outright with the remaining 137 being license-manufactured by HAL. The helicopters are meant to replace the army's ageing fleet of Chetaks and Cheetahs, some of which were inducted more than three decades ago.

The Indian Navy, with a shopping list that includes six submarines, three frigates, and eight Long Range Maritime Patrol (LRMP) aircraft, is also in negotiations with various U.S. firms. Lockheed Martin is offering its LRMP, the P 3C Orion, in competition with Boeing's 737 Multi Mission Aircraft. Although Boeing's aircraft is faster and more advanced, it will not be available before 2009, while the P 3C Orion could be supplied almost immediately. Aerospace and defence systems integration enterprise Northrop Grumman Corp. is also seeking to enter the Indian market and is currently in discussions with Indian officials about plans to expand their coastal fleet. Northrop Grumman has already signed a deal with HAL to source components for the Hawkeye, its airborne early warning/command and control aircraft, and has also offered to supply aircrafts to the Indian Navy.

New Delhi, for its part, has expressed a growing interest in using Western arms to replace some of the military hardware that it has bought from Russia. Between 70- 80 percent of the Indian armed forces inventory is said to be outdated, and in need of either an upgrade or outright replacement. Combined with this factor is the expansion of India's defence budget, which is steadily growing, along with its economy. There are indications that the budget will increase by another 10 percent in the coming fiscal year, from around $20 billion to over $22 billion. Capital expenditure on acquisitions like aircrafts, submarines, helicopters, and artillery guns has been rising substantially, from an estimated 25 percent of the defence budget during 2000-01 to almost 42 percent during the current fiscal year. This trend highlights the stress the government is placing on the modernization of India's armed forces.

The race to expand arms sales to India is not without its hurdles, however, as concerns remain over issues like proliferation, US export regulations, potential impact on China, and whether growing ties with India could alienate Pakistan, a key US ally in the global war on terror. Furthermore, Pakistan would be the target of any weapons that India purchases. Nevertheless, interest and incentive in both the US and India will overcome such obstacles as the nuclear deal facilitates a new era in bilateral defence relations.