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India and Japan late Saturday affirmed plans to "further strengthen" defence cooperation against the backdrop of an increasingly assertive China.
The agreement was reached at a meeting in New Delhi between Indian Prime Minister Manmohan Singh and his Japanese counterpart Shinzo Abe, who arrived on a visit earlier in the day.
"A strong India and a strong Japan coming together can do wonders," Abe said after the annual summit meeting.
"The relations between Japan and India have the greatest potential of any bilateral relationship anywhere in the world," he added.
The two leaders "reaffirmed their determination to further strengthen bilateral defence cooperation", the joint statement said.
Singh and Abe also "renewed their resolution" to conduct joint maritime exercises on a "regular basis with increased frequency".
Coming against the backdrop of a bitter territorial row between Japan and China over islands in the East China Sea, analysts have said Abe's three-day India trip will be keenly watched by Beijing.
Underscoring the importance India attaches to ties with Japan, Abe was set to be guest of honour Sunday at the annual Republic Day parade when New Delhi wheels out its nuclear-capable military hardware and displays its cultural diversity in a series of colourful floats.
India, which has its own simmering Himalayan border row with China that flared into a brief, bloody war in 1962, has also been cultivating deeper ties with its regional neighbours to offset China's growing might.
New Delhi traditionally invites as its guest for the high-profile Republic Day parade leaders of countries with which it is seeking closer relations.
Since coming to power in 2012, Abe has trotted the globe, partly in his self-appointed role as salesman for Japan Inc., but also to seek counterweights to China's clout.
Abe, who has been accompanied by a heavyweight Japanese business delegation, and Singh, held "extensive talks" on bilateral, regional and global issues, the statement said.
'Force of good'
Afterwards, Abe announced a $2-billion low-interest loan for extending the Delhi Metro and promised stepped-up Japanese economic cooperation on other infrastructure projects.
New Delhi is seeking $1 trillion in investment over five years to upgrade infrastructure and bolster stuttering economic growth.
Tokyo is already India's fourth-largest investor, involved in building the $90-billion Delhi-Mumbai Industrial Corridor linking India's capital with financial hub Mumbai.
Calling Japan a "key" economic development ally, Singh said "the partnership between a strong and economically resurgent Japan and a transforming and rapidly growing India can be an effective force of good for the region".
"We noted with satisfaction the growing frequency of our political engagement and our expanding defence and security cooperation. Our bilateral maritime exercises have now been established on an annual basis," Singh said.
The two countries have also participated in the multilateral "Malabar" naval exercises that include US and Australian vessels, and Japan will take part in the exercises again this year.
Abe avoided any public mention of Japan's dispute with China over islands in the East China Sea that Asia's two largest economies both claim.
However, Abe told the Times of India newspaper Saturday the "security environment of the Asia-Pacific region is becoming ever more severe". Japan fears China is seeking to exert control over key shipping lanes around its coastline.
As part of a packed agenda, Japan also pushed the sale of its amphibious search and rescue ShinMaywa US-2 planes to India's defence forces.
The planes would be unarmed, so as not to break Tokyo's self-imposed prohibition on military exports.
But with Abe having declared he wants to review Tokyo's ban on weapons exports, such a sale might open the door to Japan for sale of military equipment to India, a huge arms importer, analysts say.
"Our joint working group on US-2 amphibian aircraft has met to explore the modalities of cooperation on its use and co-production in India," Singh said.
Singh also said negotiations towards a civilian energy cooperation agreement had "gained momentum".
"More broadly, we are working towards increasing our cooperation in the area of advanced technologies" Singh said, declaring they could be "transformative" for India.
Abe's visit follows the first-ever trip to India last month by Japan's emperor and empress, billed by New Delhi as a "landmark" goodwill symbol.