During two days of meetings with Indian officials, Mr Gates identified arms sales and joint military exercises as two areas where the relationship between the countries could grow.

He did not see a risk for the US in increasing its defence ties with India.

'We have to deal with the world as we find it,' Mr Gates said. 'It's in our interest to develop this relationship just as it is in the Indians' interest. I don't think there's risk, particularly, from our standpoint in doing that.

Security analysts predict that India's budget for weapons purchases could grow to as much as US$40 billion (S$56 billion) over the next several years.

India is trying to upgrade its arsenal of submarines, tanks, fighter jets and transport aircraft. There have been several joint military exercises with the US in recent years.

India announced last month that it would purchase six C-130 cargo planes from American defence contractor Lockheed Martin, a deal worth about US$1 billion.

Lockheed and Boeing are among the companies competing for a US$10 billion contract to supply the Indian air force with 126 fighter jets, to upgrade an ageing fleet of Russian-built MIGs.

India has been looking to expand its strategic relationship with countries beyond its traditional defence partners such as Russia. In recent years, it has added Israel, Britain and France to the list, and now the United States.

Apart from the economic benefits of Indian military modernisation, US officials believe that India could be an important stabilising force in Asia and a critical counterweight to China's regional ambitions.

Mr Gates has denied that the Bush administration's strengthening of ties with India and other Asian nations was designed specifically with China in mind.

But Pentagon officials said that during Mr Gates' meetings with Indian officials, more time was spent discussing China than Pakistan, India's long-time rival.

ASSOCIATED PRESS, NEW YORK TIMES, BLOOMBERG