January 28, 2008 -- India is set to award a one-billion-dollar contract to Lockheed Martin for six Hercules transport planes in the biggest military aircraft deal with the US in five decades, an official said Monday.

A formal contract is likely to be issued next month to US-based Lockheed which is also in the race for a 10-billion dollar contract to sell 126 fighter jets to the Indian air force, a defense ministry official said.

"The reserved RFP (request for proposal) will be issued anytime now," a top ministry source told Agence France-Presse on condition that he is not identified by name or rank.

A meeting of India's security cabinet led by Prime Minister Manmohan Singh last week cleared the deal for six C-130J planes for special forces operations and left options open for further purchases, the source said.

The clearance comes ahead of an official trip to India next month by US Defense Secretary Robert Gates.

"The contract will be the most capital-intensive military aircraft deal awarded to a US firm since the early 1950s when we acquired American Fairchild C-119s," the official said.

The offer came less than a week after India handed a 1.5-billion euro contract to France's Dassault to upgrade 51 Mirage-2000 fighter jets that the Indian air force bought in 1985.

Analysts say India, the largest buyer of armaments among emerging nations, is likely to spend 50 billion dollars between now and 2018 to modernize its 1.23-million-strong military, the world's fourth largest.

Source: AFX Asia