With the U.S. facing financial crises, the second India-U.S. strategic dialogue here on Tuesday saw the U.S. Secretary of State Hillary Clinton pushing for greater investment and trading opportunities, while External Affairs Minister S.M. Krishna sought a better operating environment for the Indian I.T. sector.

In over two hours of discussions that continued over lunch, both Ministers broke new ground by discussing the situation in Central and West Asia which were preceded by official level talks over the past one month.

Ms. Clinton condoled the deaths in the recent Mumbai bomb blasts and said the U.S. had made it clear to Pakistan that “we cannot tolerate a safe haven for terrorists anywhere” because if left unchecked, the consequences could be very difficult to control. She described Pakistan as a key U.S. ally which must act against terrorists to save its own people and lauded the ongoing India-Pakistan dialogue as the “most promising approach.”

The U.S. wanted Pakistan to bring to book perpetrators of the 2008 attacks in Mumbai because it had a “special obligation to do so.” “But there is a limit to what the U.S. and India can do,” she conceded.

Ms. Clinton identified three focal points in U.S.' relationship with India — lower tariff barriers and further opening the markets to continue with the “good story” of burgeoning bilateral trade; U.S. interest in involving India in maritime security and selling equipment for the purpose especially to the navy; and, ensuring that the civil nuclear agreement takes off with conditions that enable the U.S. companies to begin talks on setting up civil nuclear power plants.

Mr. Krishna's wish list highlighted the narrowing of opportunities for the I.T. sector by a restrictive visa regime and inward looking contractual norms for I.T. companies. He also raised the absence of a Totalisation Agreement with India which avoids double taxation of income for social security taxes and the distress suffered by Indian students by the closure of the Tri Valley University in the U.S.

In a meeting with Union Finance Minister Pranab Mukherjee, Ms. Clinton was informed that India was about to finalise the guidelines of an Infrastructure Debt Fund to accelerate investment by U.S. companies.

Troop withdrawal

On Afghanistan, the Joint Statement did not touch upon the withdrawal of foreign troops. Responding to a question, Mr. Krishna indicated India's discomfiture with a hasty withdrawal. The U.S. has been informed of India's request to factor in the comfort level of the Afghan government and the ground realities so that Kabul would be in a position to defend itself against Taliban “sponsored” terrorists, he said.

The two Ministers noted the breadth of the relationship which now covers “all major issues and regions of the world” – counter-terrorism, intelligence sharing, defence cooperation, export controls and non-proliferation, besides expanding to the existing people-to-people ties, scientific, space, and technology collaboration and clean energy cooperation.

Megacity policing

In counter-terrorism, India and the U.S. were cooperating in the areas of megacity policing, cracking down on counterfeit currency and illicit financing, ensuring cyber security and capacity building and technology upgrading.

The joint statement made a reference to several sub-groups that have come up to discuss specialised subjects such as U.N. matters and Peacekeeping Operations since U.S. President Barack Obama's visit to the country last year.