U.S. urges India to step up as regional power

By Mayank Bhardwaj

NEW DELHI (Reuters) - The United States urged India on Saturday to bolster its role as a global power and force for regional stability, ahead of Prime Minister Narendra Modi's first visit to Washington since his election in May.

In a speech wrapping up two days of talks, Defense Secretary Chuck Hagel also played up deepening defence industry cooperation but did not have any major new arms export deals to announce.

"The United States strongly supports India's growing global influence and military capabilities including its potential as a security provider from the Indian Ocean to the greater Pacific," Hagel told an invited audience.

Both Washington and New Delhi share concerns about the increasing geopolitical assertiveness of China, which from economic parity with India in 1980 now has an economy that is four times as large.

India, which has embraced non-alignment since independence in 1947, long relied on the Soviet Union to equip its armed forces. But, in recent years, it has become the largest buyer of U.S. weaponry.

Before Hagel's visit, Indian officials played up chances that orders for U.S. Apache and Chinook helicopters, both made by Boeing, might advance. No announcement was made on those deals but officials have said the two sides would deepen cooperation on missile systems.

Hagel, in a speech at the Observer Research Foundation, a privately funded think-tank, noted that India had spent $9 billion on U.S. defence equipment since 2008 - compared to half a billion dollars before then.

"But we can do more to forge a defence industrial partnership," he said, calling to "transform our nations' defence cooperation from simply buying and selling to co-production, co-development and freer exchange of technology."

India's cabinet has just cleared a proposal to allow 49 percent foreign participation in the defence industry, up from a current cap of 26 percent, in a bid to boost local manufacturing and end its chronic dependence on arms imports.

Some Western manufacturers have been lukewarm about the raising of the cap on defence investment, saying it did not go far enough for them to transfer technology to India.

LAYING THE GROUND

Hagel's visit, which followed Secretary of State John Kerry's a week earlier, seeks to lay the ground for Modi's first trip to the United States, where he will meet President Barack Obama at the end of September.

The Hindu nationalist was denied a U.S. visa in 2005 over communal rioting in Gujarat three years earlier where, as state premier, he faced criticism for failing to prevent the killing of more than 1,000 people, mainly Muslims.

He has denied wrongdoing and was exonerated in an investigation later ordered by the Supreme Court.

Modi has, in less than three months in power, practised a 'neighbourhood first' foreign policy, inviting regional leaders to his inauguration and making brief trips to Bhutan and Nepal.

In the weeks ahead, he will engage with India's most important counterparts - first travelling to Japan, receiving Chinese President Xi Jinping and then heading to Washington.

"Just as America need not choose between its Asian alliances and its constructive relationship with China, India need not choose between closer partnership with America and improved ties with China," said Hagel, who was due next to visit Australia.

(Writing by Douglas Busvine; Editing by Janet Lawrence)