The leaders of France and India said negotiations on a $12 billion fighter jet contract, the world's biggest defence deal, were making good progress after talks Thursday in New Delhi.
French President Francois Hollande is hoping his first visit to Asia will help push India to ink a deal to buy 126 fighter jets from France's Dassault Aviation which has been on the negotiating table since January 2012.
Mr Hollande and Prime Minister Manmohan Singh also discussed agreements on issues ranging from nuclear power to short-range missiles on the first day of the French president's two-day visit, which will also take him to Mumbai.
But the deal on the Rafale jets was the most burning issue, with the head of the Indian air force having said last week that he hoped it would be finalised by the middle of the year.
"The discussions on the MMRCA (medium multi-role combat aircraft) contract are progressing well," Dr Singh said at a press conference with the French President.
Mr Hollande said, "The Prime Minister and myself noted that some progress has been achieved in the discussions and I do hope we can reach a conclusion."
Dassault chief executive Eric Trappier, who is part of a large business delegation accompanying Mr Hollande, told AFP last week the group hoped to conclude the sale this year.
In a welcome showcase for Dassault, the jets have been deployed during the French-led military campaign to drive out Islamists from northern Mali.
India last year chose the French firm for exclusive negotiations to equip its air force with new fighters. While it says the discussions are proceeding smoothly it has already said the contract will not be signed during Mr Hollande's visit as it is being fine-tuned.
Another major project up for discussion was a contract for France's Areva to build a 9,900-megawatt nuclear power plant in the western state of Maharashtra.
The $9.3 billion framework agreement was signed during a visit to India in 2010 by then-president Nicolas Sarkozy. But it has run into stiff opposition from environmentalists concerned about seismic activity in the area and safety fears following Japan's Fukushima nuclear disaster.
But Dr Singh said India remained committed to the project.
"We reiterated our commitment to its early implementation as soon as the commercial and technical negotiations on which have we made quick progress are completed," he said.
Mr Hollande has brought some of his most senior government figures including Foreign Minister Laurent Fabius and Defence Minister Jean-Yves Le Drian to India.
He is also accompanied by his partner, Valerie Trierweiler, whom India has decided should be treated as if he were his wife.
After being accorded a red-carpet reception and gun salute at the residence of his counterpart Pranab Mukherjee, Mr Hollande spoke in English to thank his host for granting him the "great honour" of a state visit.
Following the line of his predecessor Nicholas Sarkozy, Mr Hollande endorsed India's campaign to become a permanent member of the United Nations Security Council. France is one of the five existing permanent members.
"Our partnership is based on a number of principles that we strengthened today, such as defence," said the French President. "Our cooperation goes back over a long period," he added.
Dr Singh said France had "given us strong and steadfast support" throughout India's post-independence history.
"Our relationship is defined by the breadth and diversity of our cooperation as well as by the intensity of our dialogue," he said.