Washington, Feb 25 (IANS) The Obama administration is sharply expanding American weapons sales to both India and Pakistan in a bid to forge 'closer ties with each country while creating new opportunities for American defence firms', according to the Wall Street Journal.

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 stands to nearly double next year, the leading US financial daily reported Thursday.

Washington's relationships with the two nations are 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 counterinsurgency assistance fund for Pakistan is slated to increase from $700 million in fiscal year 2010 to $1.2 billion in fiscal year 2011.

'We do straight commercial deals with India, while Pakistan effectively uses the money we give them to buy our equipment,' the Journal said citing a US official who works with the two countries.

'But we think that's ultimately in our national interest because it makes the Pakistanis more capable of dealing with their homegrown terrorists.'

'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 was quoted as saying.

The Obama administration is trying to persuade New Delhi to buy American jet fighters, a shift White House officials cited by the Journal said would lead to closer military and political relations between India and the US.

'It would also be a bonanza for US defence contractors,' the Journal said noting US has dispatched senior officials such as Gates to New Delhi 'to deliver the message that Washington hopes India will choose American defence firms for major purchases in the years ahead'.

Shortly after a late January visit by Gates - on the same tour that took him to Islamabad - the administration signed off on India's request to purchase 145 US-made howitzers, a $647 million deal. Pentagon spokesman Geoff Morrell said Gates's visit didn't affect the substance or timing of the howitzer purchase.

That came days after India formally expressed its intent to purchase 10 cargo transport aircraft from Boeing Co. in a deal that could be worth more than $2 billion, according to analysts cited by the Journal.

Last year, India spent $2.1 billion on eight Boeing long-range Poseidon reconnaissance aircraft for the Indian navy.

Still in the pipeline is India's planned $10 billion purchase of 126 multi-role combat aircraft for its air force. US firms Boeing and Lockheed Martin Corp. are vying with Russia and European companies for that deal, which would be a near-record foreign sale for the firms.

'That's the biggest deal in the world right now,' Captain was cited as saying by the Journal. 'If it goes to an American firm, that would be the final nail in the coffin in terms of India shifting its allegiance from Russia to the US.'