NEW YORK The United States is sharply expanding its weapons sales to both India and Pakistan in a apparent bid to gain influence in both South Asian countries while creating new opportunities for American defence firms a report in a major US newspaper said on Thursday. The report appeared in The Wall Street Journal as foreign secretaries of the two South Asian nations met in New Delhi to ease tensions in the sub-continent. The US has sought to remain neutral in the thorny relationship between the nuclear-armed neighbours, the Journal said, while pointing out that Washington hasnt been shy about pursuing weapons deals in the region. 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, it said. At the same time, according to the newspaper, American military aid to Pakistan stands to nearly double next year, allowing Islamabad to acquire more US-made helicopters, night-vision goggles and other military equipment. The aid has made it easier for Pakistan to ramp up its fight against militants on the Afghan border, as the US tries to convince Islamabad that its biggest security threat is within the country, not in India, the dispatch said. During a late January trip to Islamabad, Defence Secretary Robert Gates said the US would for the first time give Pakistan a dozen surveillance drones. But India and Pakistan have each been irked when the US made big-ticket weapons sales or transfers to the other, the newspaper said. 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 Pakistans national security by making it easier for India to covertly build more nuclear weapons. Washingtons 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 thats 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 LLPs Aerospace and Defence Practice was quoted as saying. Russia has been Indias main source of military hardware for decades, supplying about 70 percent of equipment now in use. Moscow is working to keep that position, with talks ongoing to sell India 29 MiG-29K carrier-borne jet fighters, according to an Indian Defence Ministry spokesman. 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 Indias request to purchase 145 US-made howitzers, a $647 million deal. Pentagon spokesman Geoff Morrell said Gatess visit didnt 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 Indias 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. Thats 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.