Agreement for purchase of sensitive military communication equipment signed with Mattis and Pompeo in New Delhi.

Indian and American officials signed an agreement on secure military communications following talks between top officials, which analysts say will open the door for the sale of sensitive US military hardware to New Delhi.

James Mattis, US defence chief, and Secretary of State Mike Pompeo held discussions with India’s Foreign Minister Sushma Swaraj and Defence Minister Nirmala Sitharaman in New Delhi on Thursday.

Both sides said they were happy with the progress made so far.

Pompeo called the Communications Compatibility and Security Agreement a “milestone” in the US-India relationship, while Sitharaman said the pact would enhance India’s defence capability and preparedness.

Analysts say the deal could result in the US transferring hi-tech equipment such as the Sea Guardian armed surveillance drones to India.

“This is an important agreement and will be an advantage to India in the naval area. But there could be complications relating to non-US equipment that the Indian military uses in its fighter aircraft, ships and will use in the Russian S-400 missile systems,” Manoj Joshi, senior analyst at the Observer Research Foundation, told Al Jazeera.

“What the protocol will be in sharing information linked to non-US systems is something that is not yet clear,” he said.

Iran, Russia sticking points

India’s extensive trade ties with US sanctions-hit Iran and Russia have been a key sticking point between the two sides in recent months.

A US law, the Countering America’s Adversaries Through Sanctions Act, threatens to impinge on India’s massive defence trade with Russia.

“India’s compulsions lie in its own interests to maintain important ties with Moscow and Tehran, as well as build its ties with the US. India has a clear idea of itself as a major regional power … so it needs an autonomous perspective on ties with third countries,” Joshi said.

He noted that access to Iranian oil imports was vital to India’s growth in the coming decades, while the US is demanding that allies cut trade with Tehran.

New Delhi, one of the biggest buyers of Iranian crude, will have to find measures to nullify the effect of US sanctions on Iran.

India’s reluctance to disrupt its Iranian oil imports stems from mounting domestic pressure on the government of Prime Minister Narendra Modi – because of rising oil prices and a weakening rupee against the dollar – months away from a general election.

India is also seeking to avoid US sanctions on those who do business with Russia’s military and intelligence sectors.

Russian military hardware accounted for 62 percent of India’s total weapons imports during the past five years, the Stockholm Peace Research Institute said in a report this year.

India is also in talks with Russia to buy five advanced S-400 long-range, surface-to-air missile systems, a possible deal that could face rough weather under new US sanctions.

Pakistan question

Before his India visit, Pompeo met Imran Khan, Pakistan’s new prime minister, on Wednesday, saying he was hopeful of “a reset of relations”.

India’s own ties with its neighbour Pakistan have remained frosty with no official talks held over the past few years. The two countries have for decades jostled for influence in war-torn Afghanistan.

“The real interest India has is that the Americans maintain their military position, however reduced, in Afghanistan. One of the key reasons is that India believes that ties down Pakistan to its western front,” foreign policy analyst Pramit Pal Chaudhuri told Al Jazeera.

On Thursday, the US and India also announced a hotline between their defence chiefs, Pompeo said.

“Defence came out as the single most important aspect of our discussions today,” Sitharaman said.

Common ground

Economic links have blossomed since India’s market reforms in the early 1990s. Two-way trade crossed $100bn in 2016 from just $5bn in 1990, turning the United States into one of New Delhi’s key trading partners.

A recent Foreign Policy piece argued the US “shouldn’t miss its chance with India.”

The impulse to strengthen ties with India also perhaps explains why the US downplayed its concerns over New Delhi trading with Moscow and Tehran.

“They [missile system purchase from Russia and oil from Iran] are part of the conversation. They will certainly come up, but I don’t think they will be the primary focus,” Pompeo told reporters earlier on Thursday.

India will continue to walk a tightrope between Washington and its traditional allies.

“India has been doing so till now, and it will manage similarly in the future,” Joshi said.