Clinton wants to improve economic ties in India visit

US Secretary of State Hillary Clinton said that Pakistan must act against terror for its own sake. The US stated that entry into nuclear suppliers group is linked to liability clause.

Clinton hopes to cement gains in ties with emerging global power India during talks in New Delhi on Tuesday while heading off new frictions with fragile US ally Pakistan.

Clinton's two-day trip to India, her second as secretary of state, follows President Barack Obama's visit last November and underscores Washington's growing bonds with the world's second most populous country and its USD 1.6 trillion economy.

Clinton will meet Indian leaders for a US-India "strategic dialogue" session, regular meetings designed to get officials from both sides working more closely together, on a trip that begins nearly a week after a deadly triple bomb attack on financial capital Mumbai.

She will then fly to Chennai, an emerging hub for US trade and investment, for what American officials bill as a major policy speech on US-India relations both in the region and across the Asia-Pacific.

Clinton's trip will emphasize economic ties between India and the United States, and regionally as a way to build confidence among India and its neighbours, Afghanistan and Pakistan, officials said.

"Priorities include, number one, trying to deepen our economic cooperation, which has been growing substantially year on year, and she'll point out a few ways we think we can take it to the next level," one U.S. official told reporters on Clinton's plane.

Despite the economic focus, which will also include talks with Finance Minister Pranab Mukherjee, the pending US drawdown of forces in Afghanistan and Indian relations with traditional rival Pakistan will both be on the agenda as security fears grow following Wednesday's attacks on Mumbai.

US officials and political analysts say Clinton will urge India not to raise tension, concerned that any reaction by New Delhi could upset an already fragile US relationship with Islamabad.

"This is not about nudging or pushing or cajoling, it's about encouraging and it's also about reinforcing the steps they're already taking," the U.S. official said, adding that Clinton would urge India to open its doors economically to its far less robust neighbour.

"She'll stress that focusing on the economy up front is a way to build confidence... from there, they can work up toward dealing with some of the more sensitive security issues."

It may not be an easy sell -- although analysts say India is increasingly worried over the stability of its neighbour and has its own reasons for moving forward cautiously.

Overcoming suspicions

No one has claimed responsibility for last week's Mumbai blasts, and police have questioned members of a home-grown militant group, taking some of the direct heat off Pakistan.

But both New Delhi and Washington suspect parts of the Pakistani establishment may not be on board with the US fight against Islamic militants. The doubts underscored in May when US forces killed al Qaeda leader Osama bin Laden in a compound in Pakistan without telling the government in advance.

In Washington, the Republican chairwoman of a committee in the House of Representatives proposed stopping economic aid to Pakistan unless the Obama administration can certify that Islamabad is helping the United States uncover whatever support network bin Laden had in Pakistan before he was killed.

The House Foreign Affairs Committee will vote on the proposal by Representative Ileana Ros-Lehtinen on Wednesday. It threatens USD 1.5 billion in non-military aid allocated for Pakistan in 2012.

Washington is already holding back USD 800 million in military aid for Pakistan in response to Islamabad's cutback of US military trainers, limits on visas for U.S. personnel and other bilateral irritants.

Clinton will also brief Prime Minister Manmohan Singh and other officials on US plans to draw down about a third of the 100,000 US forces from Afghanistan during the next year, which has sparked concern in New Delhi of an overly-hasty withdrawal.

Despite shared strategic concerns, which include China's growing assertiveness and traditional friendship with Pakistan, Clinton will also push New Delhi hard to do more to improve the economic relationship.

India remains only the 13th largest trading partner of the United States, behind oil exporter Venezuela, and Clinton is expected to advocate for more US arms purchases after Washington was disappointed when India rejected US bids for an USD 11 billion fighter aircraft contract in April.

She will also raise US concerns that its firms are lagging in gaining access to India's USD 150 billion nuclear energy market, seen as a major potential driver of trade.

US power giants such as General Electric hope to get a foothold after a landmark 2008 nuclear cooperation accord. But progress has been slow and Washington wants India to water down a 2010 law which would force all private nuclear reactor builders to take on uncapped compensation in the event of a nuclear disaster.

The United States also wants India to move on plans to open up potentially lucrative sectors such as insurance and large-scale retail, while the outsourcing of US jobs to cheaper Indian workers has also been a concern.

Also watch the accompanying video for Hillary Clinton's comments.