The "New Framework for the US-India Defense Relationship," signed Tuesday by Defense Secretary Donald Rumsfeld and his Indian counterpart, Pranab Mukherjee, seeks joint weapons production, technology transfer and collaboration on missile defense.

The two countries also set up a Defense Procurement and Production Group and agreed to start a Joint Working Group to study the Defense Policy Group that guides defense relations between the two countries.

The deal comes a day after Mukherjee told a Washington audience that if his country was to play a part as an engine of growth and factor of stability in Asia, U.S. restrictions on transfer of dual-use nuclear and space technologies should be relaxed.

"Our nuclear energy and security programs are separate," he said. "Restrictions against India's energy program are anachronistic."

The defense minister spoke Monday at the Carnegie Endowment for International Peace. During his visit he met with Vice President Dick Cheney and Secretary of State Condoleezza Rice.

Mukherjee said energy scarcity and dependence biggest challenges to India's economic growth.

"If indeed India is to realize its economic potential, India needs alternative sources of energy, he said. "Foremost among those available is nuclear energy."

He said the United States and India has begun a dialogue on the energy issue to address some of the restrictions on technology transfer. The easing of the restrictions would benefit India's economic prospects over the next few decades, Mukherjee said.

Energy-starved India is making several deals, including ones with Iran that have sparked the ire of the United states, in a bid to feed the country's ever-increasing energy needs.

"Energy is going to be the burning issue in the coming years," Ahmad Tariq Karim senior adviser at the IRIS center at University of Maryland said. From an Indian perspective, he said, it was necessary to pursue dual-use technology and seek assurances from the United States related to its energy needs.

India has in the past emphasized that it has in the past developed technology that was denied to it because of sanctions.

"The United States has to choose between keeping India on board or lose its goodwill," Karim said, adding the two countries were in the process of "reaffirming the discovery of each other as friends."

Mukherjee's visit, a precursor to Indian Prime Minister Manmohan Singh's visit to the United States next month, is seen as a step in this direction.

Relations between the two countries has traditionally been frosty. During the Cold War, Washington supported India's rival Pakistan and India was close to the Soviet Union, whose main successor state, Russia, is still New Delhi's largest arms supplier.

Ties were so bad that in Cold war-era that, according to documents released by the State Department Tuesday, President Nixon referred to Indian Prime Minister Indira Gandhi as an "old witch," and his national security adviser, Henry Kissinger, called Indians "bastards."

Relations between Washington and New Delhi were opened up by the Clinton administration and the current Bush administration has engaged India as a major international partner and said it wants to make help the country become a "major world power."

India, too, has been cementing its traditional defense and diplomatic ties with countries such as Russia, while it has embarked on new relations with Israel, Central Asian states and even Pakistan.

"There was a clear dominant almost hegemonistic tone (in Mukherjee's speech) about India's role in the region and its extensive outreach," said Touqir Hussain, senior fellow at the U.S. Institute of Peace.

He said there was a new confidence in the way India saw itself and its role in the region after the U.S. assertion it wanted India to be a superpower.

Mukherjee said the United States and India realized they shared common values and security concerns and there is "an objective convergence of interests."

"It is crucial that India and the U.S. work together with the international community to find a new order for 21st century," he said.

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