US, India eye closer defence ties and more trade

The United States and India agreed on Wednesday to deepen cooperation in the defence industry, maritime security and cyber security, with Washington highlighting what it said was a "closer convergence" of strategic interests.

U.S. Secretary of State Hillary Clinton and Foreign Minister Somanahalli Mallaiah Krishna took pains after their third annual strategic dialogue to dispel impressions of drift after a rapid growth in ties from 2005.

"Today we are seeing something new: The strategic fundamentals of our relationship are pushing our two countries' interests into closer convergence," she said.

The convergence involved "not just our shared democratic values but, also economic imperatives and our diplomatic and security priorities," added Clinton.

She said the two countries would work toward signing a bilateral investment treaty and boosting trade, while in the security realm step up cooperation on counter-terrorism, cyber security and three-nation dialogue with Afghanistan.

"On all these and other key issues, we are working to convert common interests into common actions, and we have to follow through," she said.

Krishna repeated a message he gave in a speech on Tuesday to U.S. business leaders frustrated over India's regulatory uncertainty and policy gridlock, saying he was "sensitized to the concerns articulated by U.S. business."

"The Indian economy will restore investors' confidence and regain the growth momentum," he told reporters, flanked by Clinton.

Clinton and Krishna "support the growing emphasis on defence technology transfers and co-development and co-production in our expanding defence relationship," he said.

"Stronger and more effective cooperation in counter terrorism, homeland security, cyber security, and intelligence in recent years is an important aspect of our strategic partnership," added the minister.

The two large democracies, whose ties were distant throughout the Cold War era as Delhi both tilted toward Moscow and spearheaded the Non-Aligned Movement, have built closer military ties in recent years, training together and signing more than $9 billion in defence contracts.

But U.S. analysts say that India is likely to remain wary of any closer alignment with the United States, which has made rebalancing its military toward the Asia-Pacific the cornerstone of its foreign policy.

(Reporting By Paul Eckert; Editing by Bob Burgdorfer)