Jan. 25 (Bloomberg) -- France's President Nicolas Sarkozy said trade with India may double to 12 billion euros ($17.7 billion) by 2012 as both nations agreed to develop cooperation in fields including defense, nuclear energy and aerospace.

France and India will consider cooperation in steel, hydroelectric dams, power plants, trains and subways, the nations said in a joint statement.

India signed an agreement to take part in the construction and operation of a nuclear reactor research project in France, which is ready to increase cooperation in this field with the Asian nation as soon as it overcomes domestic opposition to an agreement with the international nuclear energy regulator.

``We want French companies to invest at least 10 billion euros in India and for at least 1,000 small- and medium-sized companies to enter the Indian market,'' Sarkozy said today at a meeting with Indian Prime Minister Manmohan Singh in New Delhi.

The French president is seeking to increase exports to India, the world's second-fastest growing major economy, because the European nation's trade deficit is swelling to a record as it loses market share in global markets.

Sarkozy is in New Delhi for a two-day state visit with about five dozen French business leaders, including Anne Lauvergeon, chief executive of power-plant maker Areva SA, Jean- Pascal Tricoire, chief executive of Schneider Electric SA, the world's biggest maker of circuit breakers, and Jose Luis Duran, head of Carrefour SA, Europe's biggest retailer.

Trading Partners

Denis Ranque, chief executive officer of Thales, based in Neuilly-sur-Seine near Paris, Europe's largest military- electronics company, and Charles Edelstenne, chief executive of Dassault Aviation SA, are also part of the delegation.

France was India's 15th-biggest trading partner in 2006, representing 1.8 percent of imports that year, compared with a 4.1 percent market share for Germany and about 10 percent for the U.S.

Areva won an 18-million euro contract from Power Grid, and a 23 million-euro contract from NTPC to provide equipment for a power sub-station, France and India said in a joint statement.

European Aeronautic, Defence & Space Co. and National Aviation Company of India signed a memorandum of understanding to jointly create a maintenance center for Airbus planes, and Carrefour said it will create cash and carry stores in India and select an Indian franchisee for all other retail stores.

Jet Tender

India will launch a tender for French companies to modernize its fleet of Mirage-2000 combat jet, said a Sarkozy aide, who briefed reporters on condition that he not be named.

Safran SA's Snecma unit is ``well placed'' in a project to develop the so-called ``Kaveri'' engine that India will develop for its planned ``light'' combat jets, the aide said. MBDA, Europe's largest missile maker, is also ``well placed'' to supply India with surface-to-air short-range missiles. The Sarkozy aide said that Dassault will propose its Rafale jet in India's tender for 126 combat jets.

In separate agreements, France and India said they will boost intelligence cooperation to fight terrorism and facilitate the transfer of sentenced prisoners between the two countries.

To contact the reporter on this story: Francois de Beaupuy in New Delhi at fdebeaupuy@bloomberg.net.

Last Updated: January 25, 2008 12:06 EST