US Secretary of State Hillary Clinton urged India on Tuesday to amend a law that has put off US companies from taking part in the $150 billion nuclear energy market and further open up Asia's third largest economy to foreign investment.
Clinton opened high-level US-Indian talks with a polite but firm push for New Delhi to get moving on key economic issues as both sides seek to firm up a relationship that thus far has promised more than it has delivered.
India's government has long pledged to open up the $1.6 billion economy but must also wrestle with local opposition fearing the loss of jobs to foreign companies. Clinton also pledged strong US support for India's battle against extremism - underscored by last week's deadly triple bomb attack on Mumbai - and said she would press India's nuclear-armed neighbour Pakistan to do more to crack down on militants believed to be operating from its territory.
Clinton's visit to India, her second as secretary of state, was aimed at building on progress made since US President Barack Obama visited in November and declared the two giant democracies were natural partners.
Since then, however, US hopes for swift implementation of the civilian nuclear deal have run into politically complicated legislative and regulatory hurdles that major US companies say block them from getting a piece of the action.
"We need to resolve those issues that still remain so that we can reap the rewards of the extraordinary work that both of our governments have done," Clinton said during a news conference with Indian Foreign Minister S.M. Krishna.
The United States wants India to "tighten up" legislation to protect equipment makers from liability in case of nuclear accidents, saying it is much more stringent than comparable laws in other countries. General Electric and Westinghouse, the US-based arm of Japan's Toshiba Corp , are keen to take a slice of the market.
A landmark 2008 deal brought India out of the nuclear cold since facing global sanctions for its 1998 atomic tests, but also provided a central theme for its relations with the United States.
Clinton's visit covers a range of bilateral issues including counter-terrorism co-operation, which both sides say is a major priority as relations between the two countries continue to improve since end of the Cold War, when India was seen as closer to the old Soviet Union.
"From the American side the focus (of the visit) was on economic partnership. They want to use the strategic platform to get greater market access to India and encourage India to move towards the second generation of economic reforms," said Kanwal Sibal, a former Indian foreign secretary.
Clinton briefed Indian leaders on US plans to draw down troops in Afghanistan as well as on Pakistan, where the halting battle against militants has spurred questions about Islamabad's true intentions.
Krishna, reflecting widespread concern in India that the US plan for Afghanistan may leave the country as a base for Islamic militants, said Washington should take a close look at the risks involved.
"It is necessary for the United States to factor Afghanistan's ground realities as they see it...so that they can appreciate that Afghanistan could be in a position to defend itself against the terrorists sponsored by the Taliban."
Clinton also met Indian Finance Minister Pranab Mukherjee, to press him on promises to open domestic financial and insurance markets, as well as to give greater access to retail companies, such as US sales giant Wal-Mart.
Clinton made clear that arms sales, too, are part of the equation, saying India, seen as one of the world's biggest defence buyers in coming years, could further improve US military co-operation by buying more US weaponry.