By Alistair Scrutton
NEW DELHI (Reuters) - Afghan President Hamid Karzai began a two-day visit to India on Tuesday that could boost the two countries' economic ties and lead to an agreement for India to train police, in a trip likely to irk Pakistan as tension grows in the region.
India is one of Afghanistan's biggest bilateral donors, having pledged about $2 billion since the 2001 U.S. led-invasion, for projects from the construction of highways to the building of the Afghan parliament.
Indian Foreign Minister S.M Krishna said on Tuesday a strategic partnership agreement would be signed, a formal tightening of links that could spark concerns in Pakistan that India is increasingly competing for influence in Afghanistan.
The agreement would be one of several being negotiated by Kabul, including one with the United States, that are part of an Afghan bid for greater security as NATO troops head home.
India wants to ensure that a withdrawal of U.S. troops by 2014 does not lead to a civil war that spreads Islamic militancy across borders. At the same time, it knows its traditional foe Pakistan has far greater influence in Afghanistan.
Karzai's visit, during which he is meeting Indian Prime Minister Manmohan Singh as well as Foreign Minister Krishna, has been planned for months, but it comes as Afghanistan appears increasingly frustrated with Pakistan.
Many senior officials accuse Pakistan's intelligence agency of masterminding the assassination last month of Burhanuddin Rabbani, Kabul's chief peace negotiator with the Taliban.
Karzai himself has said there is a Pakistani link to the killing, and investigators he appointed believe the assassin was Pakistani, and that the suicide bombing was plotted in the Pakistani city of Quetta.
"At this juncture, the visit will cause great heartburn in Islamabad," said Saeed Naqvi, a fellow at the Observer Research Foundation think-tank in New Delhi.
"That is unfortunate from the Indian perspective because anything achieved in the visit will be seen by Pakistan as an insult."
Wary of Pakistan, Indian officials have always said they want to focus on what they like to call "soft power" -- economic aid and trade. But India could offer more security training to Afghanistan, something almost certain to annoy Pakistan.
India has already trained a small number of officers from the Afghan National Army.
Still, India treads carefully. It suspects Pakistan of involvement in several major attacks, including two bombings of its embassy in Kabul in 2008 and 2009, seen as warnings from Islamabad to stay away from its traditional "backyard."
Without a land border with Afghanistan and dependent on Pakistan for any overland trade, India knows it influence is limited.
"India will want to play its part in keeping Afghanistan stable, but it is focusing mainly on economic ties," said C. Raja Mohan, senior fellow at New Delhi's Center for Policy Research. "It does not does not see itself as a counterbalance to Pakistan. It knows that Pakistan is setting the terms there."
Karzai may also be wary of upsetting Pakistan, a country crucial for forging any peace deal with the Taliban.
"Karzai wants to sign a strategic deal with India during his trip but it may hurt his recent call on peace talks with Pakistan," said Ahmad Saidi, a Kabul-based political analyst. "If Afghanistan want to move forward with a peace process, it should attract Pakistan's attention."
India does have historical ties to former Northern Alliance leaders who battled the Pakistan-backed Taliban in the 1990s. Some believe that India could increase its influence with these leaders if Afghanistan moves back toward civil war.
For the moment, trade appears to be what matters.
A consortium led by state-run Steel Authority of India (SAIL) could invest up to $6 billion in mines, railroads and a steel plant in a race with China to lock in raw materials for two of the world's fastest-growing economies.
The contract for the Hajigak iron ore mines in Bamiyan province is potentially the single biggest foreign investment project in Afghanistan.
(Additional reporting by Hamid Shalizi in Kabul; Editing by Paul de Bendern and Daniel Magnowski)