WASHINGTON, June 3: The United States has agreed to offer an unprecedented defence deal to India which will enable Indian companies to produce equipment for C-130J military cargo planes on subcontract. The US hopes that the $1.06 billion deal will open the door to future defence deals with India which has emerged as one of the world's biggest importers of military armament in the past few years.

In next five years, India's import of military hardware and software will reach $30 billion.

In the past three years, India spent as much as $10.5 billion, making it the largest arms importer in the developing world.

India’s future purchases include the 126 fighter jets, a variety of helicopters and long-range maritime spy aircraft.

The US is particularly keen on selling the 126 fighter jets India plans to buy and Lockheed-Martin, which makes the C-130J planes India is now buying, has offered to sell the fighter jets as well.

Company officials have indicated that if Congress allows, they will also offer a transfer of technology agreement to India for these fighter jets.

The C-130J aircraft are used for specialised operations like storming hostage holding centres and hijacked planes. The aircraft has a capability to land even in improvised makeshift landing grounds and that too without lights.

India has requested as many as six of these four-engine turboprop along with four Rolls-Royce Plc spare engines, eight AAR-47 missile warning systems and communications equipment.

The US Defence Security Cooperation Agency informed Congress that the deal would require the US administration to make an unprecedented trade concession to New Delhi, allowing Indian companies to produce some equipment on subcontract.

The arrangement is called an offset agreement in trade jargon, allows the buyer to offset the costs of the deal by producing some of the equipment locally.

Although US laws require the administration to notify such deals to Congress, the legislature rarely steps in to block such sales.

The sale would bolster a “US-Indian strategic relationship that continues to be an important force for political stability, peace and economic progress in South Asia,” the Pentagon told Congress.

The C-130J Super Hercules would give India “a credible special operations capability that will deter aggression in the region, provide humanitarian airlift capability and ensure interoperability with US forces in coalition operations,” the official notification said.

During the Cold War, India relied largely on the Soviet Union for arms but it is increasingly eyeing advanced equipment from the United States. In June 2005, India and the United States signed a 10-year defence framework agreement that called for expanded joint military exercises and increased defence-related trade.

Last year, the United States approved the transfer to India of six UH-3H Sea King helicopters from its excess inventory as part of growing military-to-military ties, the security agency’s records show. It also transferred to New Delhi the Trenton, an amphibious transport ship.