The comments by Defence Minister Pranab Mukherjee are likely to reassure French and South African arms companies who have been hoping to grab multi-billion dollar contracts from India's technology-starved military.

"The objective will be to modernise the armed forces. Upgrade their skills. It will be a continuous process," Mukherjee said in his first news conference since assuming office at the weekend.

"Some generals advised me that when there is peace then it is time to prepare for the future," he added. "Procurements will be on a fast track but they will be in a clean and transparent manner."

The new defence minister declined to elaborate on specific projects but said his Congress party-led coalition government would "not repeat mistakes of the past" and would utilise unspent budgetary allocations on military spending.

"There have been complaints... There should be proper budgeting because our resources are scarce and they should be utilised properly," he said.

Mukherjee indicated that the new government would not shelve military ties with Israel, developed under the previous government.

Highly-placed government sources had earlier said that communists supporting the government were reluctant to retain full-fledged military ties with the Jewish state and were pressuring New Delhi to reshape its relationship.

India and Israel during the past six years have entered into major defence contracts worth millions of dollars. The deals include the supply by Israel of three Phalcon airborne early warning systems, drones, ground sensors, anti-missile radars and assault rifles.

"I do not visualise any problem in a multi-party government. We may have divergent views but there is convergence of views when it comes to securing the country," he said in reply to questions on the future of ties with Israel.

"Such issues will be worked out in the common minimum programme," the left-leaning 20-party coalition's political agenda, the defence minister added.

India recognized Israel soon after the Jewish state's creation in 1948 but did not establish diplomatic ties until 1992 for fear of upsetting its Arab allies.

Mukherjee indicated that major deals such as the construction of six French-designed Scorpene submarines worth two billion euros (2.1 billion dollars) and the purchase of French warplanes would go through after scrutiny.

French state-owned shipbuilder Naval Constructions Directorate (DCN) has said it is on the brink of signing the Scorpene deal.

The Indian air force is already negotiating with France on the outright purchase of 18 Mirage-2000 jets, to be followed by the licensed production of 108 units in India.

"These negotiations and many more are in an advanced stage and they are likely to be carried through and quickly by our new government," a high-placed defence ministry source said.

A South African armaments firm is hoping to pick up a contract worth more than a billion dollars to equip India's newly-raised artillery division with longer-range howitzers which will replace its now-ageing Bofors cannon systems.

The previous government since October had clinched massive military deals such as the purchase of 66 Hawk jet trainers from Britain worth 1.45 billion dollars, a Russian aircraft carrier worth 1.5 billion dollars and the three Israeli Phalcon airborne radar.

The Indian military, with an annual defence budget of around 14 billion dollars, is also seeking electronic warfare systems to arm seven of its frontline ships.

WAR.WIRE