NEW DELHI: French President Nicolas Sarkozy arrives in India on Friday to shore up strategic ties, but also to regain lost ground in the lucrative race to supply the Asian giant with arms.

Sarkozy will watch the Republic Day parade in New Delhi on Saturday and hold talks with Prime Minister Manmohan Singh — with experts in India saying he will use such meetings to mend fences.

France, which had been the second largest major arms supplier to India after Russia, with sales touching nearly four billion euros in 2005, has now been overtaken by Israel.

New Delhi is due to announce during the visit that France will be the sole bidder for a contract worth up to 1.5 billion euros to upgrade its Mirage fighters.

“We are expecting an announcement from India on Friday that they will soon launch a tender reserved for French companies,” said Francois Dupont, India director for French defence firm Thales.

The Indian Air Force has 51 Mirage-2000 warplanes, made by Dassault Aviation with electronics from Thales, which need a major upgrade. But the deal is not likely to be signed before the end of the year.

France lost out to the British on a 2004 contract worth $1.4 billion to supply 66 trainer jets to India, the biggest weapons buyer among emerging nations, which is set to spend $30 billion between 2007 and 2012.

“What really has miffed France is the scrapping of the helicopter deal,” said Kapil Kak, director of the Centre for Air Power Studies, a private think tank.

Last month, India cancelled a $600million deal to buy 197 military helicopters from the European Aeronautic Defence and Space Company (EADS) unit Eurocopter.

The defence ministry has not said publicly why the deal was pulled, but senior defence sources have alleged that Eurocopter used a local go-between, despite an Indian ban on the use of middlemen in such deals.

The signing of that deal was supposed to be one of the highlights of Sarkozy’s visit. Instead, he is likely to push Eurocopter’s case ahead of a fresh tender process that will give US firm Bell another stab at the contract.

India’s decision in 2006 to buy six Franco-Spanish Scorpene submarines worth three billion dollars has also run into choppy waters. Last month, an Indian court ordered police to complete a probe into allegations that $100 million in bribes were paid.

France is also in a race with US and Russian rivals to grab a 10-billion-dollar-plus contract to sell 126 fighter jets to India, but is seen as lagging behind, with its Rafale fighter considered to be too pricey.

Dupont said France’s Dassault Aviation would put in an “excellent bid” before bidding closes in March.

Thales is part of a consortium with Dassault and missile-maker MBDA backing the Rafale, which has not been sold outside France.

With the tender process expected to take years, Dassault made an unsolicited offer last year to sell India 40 Rafales, but did not get a response, according to a company spokesman.

“The Indian market is difficult, not just for France but for everybody,” said a European defence industry source, who asked not to be named.

He said Sarkozy’s visit would determine whether France is “to boost, or not, its business in the next five years.” Kak said although there were “ominous signs” for the defence contract relationship, he predicted the two sides would find solutions during Sarkozy’s visit.

Retired Indian Air Force chief N K Sareen also said India could not afford to shut France out totally.

“India must keep all its options open... as interdependence is the punch-line of the 21st-century,” Sareen said.

“We must also keep in mind they stood by us in 1998,” Sareen added, referring to France’s

refusal to back US-led sanctions after India carried out a series of nuclear weapons tests a decade ago.—AFP