Indian and US officials plunged into some hard negotiations to break the logjam over a few ticklish issues that have held up finalisation of the 123 agreement to implement their historic civil nuclear deal.
Washington's key negotiator for the nuclear deal, Under Secretary of State for Political Affairs R Nicholas Burns, hosted a meeting on Tuesday afternoon with the Indian team led by Foreign Secretary Shivshankar Menon.
Tuesday's formal round was also attended by deputy chief of mission Raminder Singh Jassal, India's high commissioner to Singapore S Jaishankar, an expert in nuclear diplomacy, and joint secretary (Americas), Gaitri Kumar. The Department of Atomic Energy was represented by RB Grover.
The discussions on a compromise formula on the ticklish issues may spill over into a dinner that Burns hosts on Tuesday night for the full Indian team that includes National Security Advisor MK Narayanan and Department of Atomic Energy Chairman Anil Kakodkar, whose nod would be important to seal the deal.
But the clincher may come at the Indian team's meeting with US National Security Advisor Stephen Hadley at the White House on Wednesday - the second anniversary of the July 18, 2005 joint statement by Prime Minister Manmohan Singh and President George W Bush.
India swears by the July 18, 2005 and March 2, 2006 joint statements and considers restrictions placed by the Henry Hyde act passed by the US Congress last December to approve the deal in principle as beyond their pail.
Tuesday's formal talks followed a day of informal parleys on Monday including a previously unannounced meeting at the Pentagon between Narayanan, Menon and US Defence Secretary Robert Gates for what an Indian official described as a discussion on "bilateral defence cooperation and other regional and security issues".
There was no official word whether the nuclear deal also came up at the half an hour meeting, but the deal is considered the centrepiece of the new emerging strategic relationship between the world's two largest democracies.
The Indian ambassador to the US, Ronen Sen, Jassal and Gaitri Kumar attended the meeting with Gates who has served as an intelligence advisor to six presidents during a 27-year career at the CIA and the US National Security Council.
Narayanan and Menon also met on Monday two groups of scholars at the Carnegie Endowment for International Peace, a leading US think tank that often helps shape official policy apparently to address their non-proliferation concerns about the nuclear deal.
The sticky points essentially boil down to India's insistence on its right to reprocess US supplied nuclear fuel, conduct a nuclear test and guarantees for continued supply of fuel for the 14 civil reactors it has agreed to place under international safeguards under a separation plan. Eight other reactors designated military would not be subject to inspections.
US side, on the other hand has been pleading its unwillingness or inability to sidestep the Hyde Act as making any changes in the law now is considered an uphill task with the Democratic controlled Congress at loggerheads with President Bush though the India deal has broad bipartisan support.
To break the impasse, the Indian side has come up with an out-of-the-box proposal for setting up a fully safeguarded stand-alone dedicated facility for reprocessing US-origin fuel alone as Washington would neither permit reprocessing nor is it willing to take back the spent fuel.
Ahead of the talks, Washington has signalled its readiness, "to resolve the remaining outstanding issues on the 123 agreement", with an unusual State Department statement expressing confidence that "with continued hard work, flexibility, and good spirit, we will reach a final agreement."
The two sides have also sought to give a political push to the long-stalled deal with Singh speaking to Bush on Wednesday ahead of the talks. Bush is equally if not more keen on the deal that may go down as a major foreign policy success for the embattled president on par with Richard Nixon's opening up to China in 1972.
The US Congress has to again approve the final 123 agreement in an up or down vote before the nuclear deal is implemented. India also needs to sign an additional protocol with the International Atomic Energy Agency (IAEA) and get the approval of the 45-nation Nuclear Suppliers Group.
The ongoing round of talks is considered critical as there is only a small window left to present the final deal to Congress before it goes into another election cycle and President Bush leaves office in January 2009.