Australian Prime Minister Tony Abbott has sealed a civil nuclear deal to sell uranium to India and also offered to increase supplies of conventional fuel to help it overcome chronic shortages.
The nuclear deal is a further step toward India achieving international acceptability for its nuclear programme despite not ratifying the nuclear non-proliferation treaty, and follows similar agreements with the United States and France.
"We signed a nuclear co-operation agreement because Australia trusts India to do the right thing in this area, as it has been doing in other areas," Abbott told reporters on Friday after he and Indian Prime Minister Narendra Modi signed a safeguards pact to sell uranium for peaceful power generation.
"That is why we are happy to trust India with our uranium in months, years and decades."
We signed a nuclear co-operation agreement because Australia trusts India to do the right thing in this area, as it has been doing in other areas.
Talks towards the Civil Nuclear Co-operation Agreement began about two years ago after Australia lifted a long-standing ban on selling uranium to energy-starved India.
"Australia can play the role of a long-term reliable supplier of uranium to India," a brief description of the pact issued by the Indian foreign ministry said.
India is the first customer to buy Australian uranium without being a signatory to the nuclear non-proliferation treaty.
The deal, which has been criticised by environmentalists and nuclear campaigners, was welcomed by Australian uranium mining company Toro Energy.
"This unlocks the opportunity for negotiations around new mines being opened up," said Toro Energy chief executive Vanessa Guthrie, who was in India during Abbott's visit.
"We are seeking a long-term strategic partner that will take a 20-25 year view and in return will secure long-term supplies of uranium for counterparts in India," Guthrie told the Reuters news agency.
The leaders also agreed to work towards the "long-term, sustainable and reliable supply of Australian resources based on India's energy needs," including increasing sales of conventional fuels such as coal and natural gas to India.
With two-thirds of India's power stations fired by coal, and latest data showing that half of them are down to a week's stock, tapping into Australia's coal reserves is a more pressing need than accessing uranium.
"While Coal India can be asked to step up its production, the growing needs make it imperative to go in for more imports
... and what better source than Australia whose top leadership is engaged with strategic relationship with India," Rana Kapoor, president of the Indian business chamber ASSOCHAM, said in a statement.
However, nuclear power is key to future energy plans in India, where a quarter of the 1.2 billion population has little or no access to electricity, a situation Modi says he will tackle.
India operates 20 mostly small reactors at six sites with a capacity of 4,780 MW, or two percent of its total power capacity, according to the Nuclear Power Corporation of India Limited.
The government hopes to increase its nuclear capacity to 63,000 MW by 2032 by adding nearly 30 reactors at an estimated cost of $85bn.
It currently has nuclear energy agreements with 11 countries and imports uranium from France, Russia and Kazakhstan.