"The Scorpene submarine issue did not figure," Defence Secretary Ajay Prasad said as a meeting of India's security cabinet headed by Prime Minister Atal Behari Vajpayee unveiled a massive military modernisation package.

Prasad said India decided to spend 105 million dollars to arm seven of its naval ships with electronic warfare systems at the same meeting however that gave the green light to a 1.7 billion dollar trainer jet package with British Aerospace.

"Today's frontline warships need electronic warfare for surveillance and counter-measures so it has been decided to acquire seven systems at a cost of 105 million dollars from Israel's Rafael (armament) firm," Prasad said.

"We also have an indigenous programme for shipborne warfare system and by the second half of next year the Defence Research and Development Organisation will start user trials," he said of India's efforts to develop such hardware locally.

The cabinet's silence on the ongoing negotiations with the French defence group Thales and the state-run Direction des Constructions Navales (DCN) for the Scorpenes, however, surprised experts as many had expected an announcement on the 2.1-billion-dollar deal.

Highly-placed defence ministry sources said the Scorpene deal appeared to have been put on hold.

"It is not listed in the next two CCS (cabinet committee on security) meetings," a top source said, without elaborating.

The unsigned pact, which involves the transfer of French technology, will have strategic implications and increase French influence in India's military market.

Until now Indian submarines have been made with help from Russia and Germany.

Sources close to the Scorpene project said that should India give the green light France will transfer some technology, equipment and will provide "technical assistance."

The overall value of the numerous contracts generated by the project is estimated at around two billion euros (2.1 billion dollars), with half of it involving French companies.

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