The United States said on Tuesday cooperation with India was vital to ensure global financial stability as the two nations launched an economic partnership to unlock "huge" investment opportunities. US Treasury Secretary Timothy Geithner and Finance Minister Pranab Mukherjee kicked off a new economic alliance intended to achieve a step-change in commercial ties that are often eclipsed by US trade with China.
"Our economic relationship presents huge opportunities for both India and the United States" with the "beginnings of global recovery" from the worst post-war downturn, Geithner told reporters.
"We meet at a time of encouraging prospects for the US and Indian economies," added Geithner, who held talks with Mukherjee and Premier Manmohan Singh and praised India for navigating the global crisis "with a steady hand."
The US-India Economic and Financial Partnership is part of a US drive to widen its alliance with India, the world's most populous democracy and viewed as a vital US partner in one of the most volatile corners of the world.
"Our ability to cooperate on economic and financial issues will be critically important to the success of global efforts" to create a more stable global financial system, Geithner added.
Geithner regards Indian support among members of the policy-setting Group of 20 nations as crucial for controlling global financial risks.
The US Treasury Secretary sidestepped questions about US efforts to get China to strengthen the yuan in the face of demands by Congress to brand China a "currency manipulator" and pave the way for a more even global recovery.
But he said the world needs "more balanced global economic growth" that depends less on Americans buying imported goods and going into debt and more domestic demand in exporting countries such as China and Germany.
He also called for more effective international financial institutions and a more open global trading system.
India's finance minister Mukherjee hailed the economic partnership as "a milestone" that would "unleash the energy and enterprise" of the United States and the world's second fastest-growing major economy after China.
He outlined more than 600 billion dollars alone worth of investment opportunities over five years to overhaul the country's dilapidated ports, roads, communications and other infrastructure sectors.
Improving infrastructure is seen as key to putting India's economy, expected to grow by 8.75 percent
this year, onto a double-digit growth trajectory and lifting millions from poverty.
"There are immense possibilities for investment in infrastructure," especially through public-private sector partnerships, Mukherjee said.
After decades of Cold War mistrust, US-India relations have blossomed in the wake of a move by the previous administration of US President George W. Bush to allow US civilian nuclear trade with India.
The new economic partnership involves annual cabinet-level meetings and is similar to the US-China Strategic Economic Dialogue.
Geithner, who spent part of his childhood in India, is pressing India to prise open further its tightly regulated markets to US investment.
Washington argues freer markets would give the emerging economic giant cheaper access to capital to finance infrastructure and other investments.
Trade between India and the United States has roughly doubled in the past five years but both sides are now keen to promote investment.
Bilateral foreign direct investment totalled 21 billion dollars in 2008, still a pittance compared with flows between the United States and Europe or China.