Two US defence industry giants, each vying for a huge fighter-jet contract with India, hailed a bilateral accord promising to open the door to greater military commerce between the countries.

Lockheed Martin and Boeing are neck-and-neck in the race for the world's richest fighter aircraft deal in 15 years, worth almost $12 billion, to sell 126 jets to the Indian Air Force. US Secretary of State Hillary Clinton and her Indian counterpart S.M. Krishna agreed on an "end-use monitoring" arrangement that would provide safeguards for the sale of sophisticated US weaponry to India.

Mrs Clinton said the deal, which also provides for cooperation in providing nuclear technology, would pave the way for billions of dollars in exports of military hardware and civilian reactors to technology starved India.

Vivek Lal, India head of Boeing Defence Integrated, praised the accord as a "cornerstone of the increasing trust forged by both countries."

"The agreement will make it easier to share important US defence technology with India," he said in a statement.

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