After holding talks with Defence Minister Arun Jaitley, he said Britain has also agreed to having defence equipment cooperation with India for collaboration in developing military hardware, including air defence missile systems.
Sir Michael said the two sides also agreed to cooperate in readying aircraft carriers, which are under construction, for sea trials. The cooperation will cover technical aspects, training regimes and doctrines on deployment of the aircraft carriers.
"Together we can build one of the most efficient jet engines," he said.
Sir Michael, here on a four-day visit, stressed on deeper bilateral ties in defence production notwithstanding UK's strict export control regime. He said the British government had approved 99 per cent of all export licences for defence supplies to India last year.
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"We want to see collaboration between our defence companies so that they can use India as launchpad for export to third countries," he said.
The Defence Secretary said the two countries agreed to continue bilateral defence exercises. Army, navy and air force of the two nations will have exercises this year.
The British Defence Secretary said the two sides resolved to ramp up cooperation to contain cyber crime, particularly in the financial services sector.
Identifying terrorism as a major threat, he said Britain wants to deepen cooperation with India in fighting the menace.
Referring to Afghanistan, he said the UK will work with India and other governments in the region to bring down tension in the war-ravaged country.