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The United States in a significant move agreed to lift export controls on equipment for nuclear facilities in India after New Delhi assured it would address American non-proliferation concerns.

US export licensing policies will also be eased to expand bilateral cooperation in commercial space programmes, officials said after talks in Washington between Indian foreign secretary Shyam Saran and US undersecretary of state for political affairs Marc Grossman.

A joint statement described the agreement, ahead of talks between Prime Minister Manmohan Singh and US President George W Bush as "major progress".

"What this shows is a growing relationship, both in terms of the number of issues we're dealing with, the importance of the issues and the strength of the cooperation," US state department deputy spokesman Adam Ereli said.

The deal was the first phase under the "Next Steps In Strategic Partnership With India" agreed in January between President Bush and the then Prime Minister, Atal Behari Vajpayee. Officials said the agreement marked a major milestone in Indian efforts to break out of the isolation from international high-technology after US lifted sanctions slapped on India's nuclear and space programmes following New Delhi's nuclear test blasts in 1998.

The sanctions resulted in a freeze on exchanges in nuclear and other high-tech sectors such as "dual-use technology" which finds applications in both civilian and military use.

"Implementation of the (agreement) will lead to significant economic benefits for both countries and improve regional and global security," the statement said. In January, the US and India agreed to expand cooperation in three specific areas: civilian nuclear activities, civilian space programmes, and high-technology trade.

In addition, they agreed to expand dialogue on missile defense. The two governments have been locked in talks since then over India's implementation of measures to address proliferation concerns and to ensure compliance with US export controls, officials said.

"These efforts have enabled the United States to make modifications to US export licensing policies that will foster cooperation in commercial space programmes and permit certain exports to power plants at safeguarded nuclear facilities," the statement said.

Among the steps taken by the United States was the removal of ISRO headquarters from a so-called "entity list" of the department of commerce.

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