A series of reciprocal steps is designed to produce stricter Indian controls over the spread of weapons and technology, in return for expertise and supplies India has long sought from the United States, where a succession of wary U.S. administrations has refused to approve sales.

The agreement, announced by Bush in a statement from Monterrey, Mexico, is part of the latest effort by the Bush administration to stabilize South Asia, where nuclear-equipped India and Pakistan inhabit a region well-known for secretive dealings with terrorist organizations and rogue states.

Calling the United States and India "partners" in the effort to halt the proliferation of weapons of mass destruction, Bush said cooperation "will deepen the ties of commerce and friendship between our two nations and will increase stability in Asia and beyond."

The United States has sanctioned Indian companies for trading with the Iraqi government headed by Saddam Hussein, while Pakistani firms have been sanctioned for their dealings with North Korea. Several prominent nuclear scientists in Pakistan are under investigation.

U.S. officials asserted that India will receive no substantial technology until the New Delhi government enacts tougher export controls to prevent the spread of sophisticated science. The Bush administration said the principal goal is nonproliferation at a time when the administration is stepping up its efforts to deny weapons of mass destruction to terrorist groups and pariah governments.

"We've started something today and not completed anything," said a senior State Department official, adding that the program will take years to play out. A project designed in three phases holds out the possibility of sharing missile defense technology with India and Pakistan alike, the official said.

The Indian government of Prime Minister Atal Bihari Vajpayee has shown good intentions, but has not produced the results the Bush administration wants.

"We see desire, we see intention, we see willingness," said the official. "They need to enhance their regulations and their enforcement. We've seen them attempting to take steps, attempting to enforce this law or that law, but in many cases they can't finish the job."

The announcement comes amid fragile signs of cooperation between India and Pakistan, which have fought three wars, including two over the disputed province of Kashmir, since the two nations were founded in 1947. Vajpayee visited Pakistan this month for the first time in four years in a rapprochement the Bush administration has been working to support.

The agreement between India and the United States was months in the making. It lays out the beginnings of a series of "matched steps" in three areas: civilian nuclear development, space programs and high-technology trade. Targets include increasing India's nuclear safety regimens and sharing satellite technology.

India will be expected to develop stricter export controls, but will not be asked to sign the nuclear Non-Proliferation Treaty, a senior administration official said. Indeed, Indian leaders made clear that, as a nuclear country, they will not sign the treaty.

The Clinton administration imposed economic sanctions after India's nuclear tests in May 1998. The restrictions barred military sales and the transfer of military technology to India. The Bush administration waived the sanctions against India and Pakistan in September 2001 as a reward for cooperation against terrorism.

Wary of unwittingly strengthening India's military capabilities and assisting an arms race, U.S. officials said yesterday that any technology contributed to the space program must not be used in India's ballistic missile projects. Likewise, nuclear technology must not be applied to India's weapons programs, the officials insisted.

"What the United States gets out of it is a strengthened relationship with a country that is going to play a major role in the 21st century. We are looking to India for enhanced trade and economic relations, and we are also looking to India for assistance in the nuclear nonproliferation arena," said Karl F. Inderfurth, an India specialist in the Clinton administration. He called the agreement a "win-win for both countries."

He also announced that the two countries would 'expand our dialogue' on missile defence, which the US is researching and hopes to begin implementing next year.

"Cooperation in these areas will deepen the ties of commerce and friendship between our two nations, and will increase stability in Asia and beyond," Bush said. "The proposed cooperation will progress through a series of reciprocal steps that will build on each other."

In a White House statement, Bush said that the cooperation and dialogue were meant to implement the 'shared vision' that he and Indian Prime Minister Atal Behari Vajpayee found in a November 2001 meeting, when India and the United States announced a 'strategic partnership'.

Monday announcement included expanded engagement on nuclear regulatory and safety issues, nuclear non-proliferation and missile defense. The two sides will seek greater cooperation on peaceful application of space technology.

India and the US will take measures to forge an 'appropriate environment' for high-technology trade, Bush said.

He called the increased cooperation 'an important milestone' in the relationship between the two countries, based on 'common values and common interests'.

"We are working together to promote global peace and prosperity," Bush said. "We are partners in the war on terrorism, and we are partners in controlling the proliferation of weapons of mass destruction and the means to deliver them."

Speaking at the Summit of the Americas in Monterrey, Mexico, the US president said he had also agreed to expand a dialogue with India on missile defence.

He said the agreements with the Indian Prime Minister Atal Behari Vajpayee will strengthen ties between them.

India has an advanced hi-tech industry and is a regional Internet leader.

Asian bond

"Co-operation in these areas will deepen the ties of commerce and friendship between our two nations, and will increase stability in Asia and beyond," Mr Bush said.

He told delegates at the summit the two nations will take "a series of reciprocal steps," including expanded engagement on nuclear regulatory and safety issues, missile defence, and will seek ways to enhance co-operation in peaceful uses of space technology.

Mr Bush called the expanded co-operation "an important milestone in transforming the relationship between the United States and India.

A rocket weapons agreement is sure to rile neighbouring Pakistan "That relationship is based increasingly on common values and common interests," he said.

"We are working together to promote global peace and prosperity." Mr Bush added India and the US had become "partners in the war on terrorism" and in controlling the proliferation of weapons of mass destruction and the means to deliver them.

The moves between the countries are in contrast to India's public criticism of the American-led invasion of Iraq last year.

It previously demanded that any rebuilding of the country should be carried out under the direction of the UN and refused to send troops to support the coalition.