The nuclear deal signed during US President George W Bush's [Images] India visit in March is linked to the acquisition of 126 American F-16/F-18 fighter jets for the Indian Air Force in Washington's bid to squeeze Moscow [Images] out of the Indian arms market, a Russian daily has reported.

Complete Coverage: Indo-US Nuclear Tango

The United States and India exchanged 'letters of intent' concerning American companies' participation in the race for selling New Delhi 126 medium/light fighters, the Nezavisimaya Gazeta claimed.

In its article -- A Cold War with a Trade Subtext -- the daily writes that Russia [Images] faces the danger of losing India as one of its largest arms markets worth $1.5-1.8 billion annually. India has to make up its mind on acquisition of 126 fighters by the end of the year.

Russia has already offered to sell India its MiG-29s, France [Images] offered its Rafales and Sweden its Grippens. Russia is the largest exporter of military hardware to India.

Pakistan links weapons moratorium to package deal

"The US-Indian nuclear agreement signed in the course of the visit was described as historic in the US because it essentially comes down to recognition of India's nuclear status by the United States. We know now that there was more to the historical nature of the document. It opened the door to the Indian market for American arms merchants," Nezavisimaya Gazeta says, adding that the US is poised to squeeze Russia out of the Indian arms market.

The daily says that the US-Indian defence engagement would also change the situation in South Asia and influence Pakistan. "The effect these agreements will have on the state of affairs on the global scale cannot be gauged at this point, but the effect in the situation in South Asia will be -- already is -- profound. Pakistan feels slighted."

'India giving up more, gaining less from N-deal'

"Washington stands to gain enormously from this breakthrough into the Indian arms market. And that it is not China that is going to be affected by it. Russia will be affected as it has been the largest exporter of arms to India for years," Nezavisimaya Gazeta writes.