business for American defence firms.

The newspaper noted that although the US had stayed out of the Indo-Pak rift, it was pursuing deals with both to strengthen its relationship and create business for American defence firms.

The US has made billions of dollars in weapons deals with India, which is in the midst of a five-year, $50 billion push to modernise its military. At the same time, American military aid to Pakistan would nearly double next year, the leading financial daily noted.

This would allow Islamabad to acquire more US-made helicopters, night-vision goggles and other military equipment.

The paper said that Pakistan had sought a nuclear deal with the US on the lines of the Indo-US atomic pact.

During a late January trip to Islamabad, US Defence Secretary Robert Gates said the US would for the first time give Pakistan a dozen surveillance drones, a longstanding Pakistani request.

The newspaper noted that India and Pakistan have each been irked when the US made big-ticket weapons sales or transfers to the other. India lobbied against recent US legislation giving Pakistan billions of dollars in new non-military aid; the measure passed.

A top Pakistani diplomat warned last week that a two-year-old civilian nuclear deal between the US and India could threaten Pakistan’s national security by making it easier for India to covertly build more nuclear weapons.

Washington’s relationships with the two nations were very different, the Journal said, noting: “India, which is wealthier and larger than its neighbour, pays for weapons purchases with its own funds.

“Pakistan, by contrast, uses American grants to fund most of its arms purchases.”

A new US counter-insurgency assistance fund for Pakistan is slated to increase from $700 million in fiscal year 2010 to $1.2 billion in fiscal year 2011.

“For 2010 and 2011, India could well be the most important market in the world for defence contractors looking to make foreign military sales,” Tom Captain, the vice-chairman of Deloitte LLP’s aerospace and defence practice told WSJ.

The Obama administration is trying to persuade New Delhi to buy American jet fighters.