By David Alexander
NEW DELHI (Reuters) - The Defense Secretary Leon Panetta promised on Wednesday to let India buy America's best weapons technology and jointly produce and develop equipment in a bid to increase trade with the world's top arms importer.
"The United States is firmly committed to providing the best defense technology possible to India. We are both leaders in technology development and we can do incredible work together," he said on a visit to the Indian capital.
New Delhi and Washington are close partners on defense issues with some $8 billion of arms sales under their belts, moving past decades of distrust, although the United States lost out on a major fighter jet deal this year after offering old technology.
"We must move beyond a focus on individual arms sales to regular cooperation that increases the quantity and quality of our defense trade," he said, adding that Washington was moving to reform export controls that have limited weapons transfers to India.
Panetta also called on New Delhi to modernize its defense procurement rules and nuclear liability legislation and said the Pentagon would work with Indian leaders to cut red tape and speed up defense sales.
"I think close partnership with America will be key to meeting India's own stated aims of a modern and effective defense force," he said.
The friendship between the world's two largest democracies is viewed with caution from Beijing, where some in government fear India is part of a U.S. strategy to limit China's rise on the world stage. India is spending about $100 billion over 10 years on modernizing the military, in large part with an eye on China.
Panetta noted that India and the United States both see China as having "a critical role to play advancing security and prosperity in this region."
"The United States welcomes the rise of a strong, prosperous and a successful China that plays a greater role in global affairs - and respects and enforces the international norms that have governed this region for six decades," he said.
Panetta said India and the United States should conduct more regular and complex military exercises. His remarks in New Delhi came on the same day as Russian President Vladimir Putin said he will boost military exercises and cooperation with China.
Panetta is on week-long visit to Asia to spell out a new U.S. defense strategy to allies and partners in the region. The strategy, which was released in January, calls for a shift in U.S. strategic focus to the Asia-Pacific.
The Pentagon said in the security strategy that the United States was working to build on strategic ties with India, the only partner nation singled out by name in the document.
Panetta urged India's leaders to build on engagement with rival Pakistan and to "continue with additional support to Afghanistan through trade and investment, reconstruction, and help for Afghanistan's security forces."
But analysts note that New Delhi has a long history of non-alignment with the major powers and prefers to maintain its independence of action.
"I don't think that India is going to stand up and be counted right, a) because India's political time and attention is focused inwards, and b) because I don't think there is any clarity on how we position ourselves a propos the U.S.-China relationship," said Indian defense analyst Uday Bhaskar.
India last year agreed to buy a fleet of C-17 transport planes and P-81 maritime surveillance jets from U.S. company Boeing, as well as Lockheed Martin's Super Hercules.
It is at a late stage of talks to buy more than a dozen Boeing Apache helicopters and last month cleared the purchase of 145 M777 Howitzer artillery guns. Panetta made no public mention of these deals while he was in India.
Last year India dropped Lockheed's F-16 from the bidding for a $10 billion purchase of 126 fighter jets, partly because European companies were offering more modern aircraft. Some in Washington considered India's decision to go with European planes a snub to U.S. offers of a close defense alliance.
The Pentagon subsequently offered to sell India the latest F-35 jets.
(Additional reporting by Frank Jack Daniel; Editing by Ed Lane)