WASHINGTON, Dec 28: The United States has sought to strengthen its relationship with India because it recognizes the country as a key to strategic US interests, the State Department said on Thursday.

A new country report posted on the front page of department’s website, notes: “The US and India have a common interest in the free flow of commerce and resources… fighting terrorism and in creating a strategically stable Asia.”

The report, however, acknowledges that despite common interests, the two countries have differences over India's nuclear weapons programmes and the pace of India's economic reforms.

“In the past, these concerns may have dominated US thinking about India, but today the US views India as a growing world power with which it shares common strategic interests,” the report adds.

“A strong partnership between the two countries will continue to address differences and shape a dynamic and collaborative future.”

The report recalls that in December 2006, Congress passed the historic Henry J. Hyde United States-India Peaceful Atomic Cooperation Act, which allows direct civilian nuclear commerce with India for the first time in 30 years.

The United States had opposed nuclear cooperation with India because the country had developed nuclear weapons in contravention of international conventions and never signed the Nuclear Non-Proliferation Treaty. The legislation clears the way for India to buy US nuclear reactors and fuel for civilian use.

“The US and India are seeking to elevate the strategic partnership further in 2007 to include cooperation in counter-terrorism, defence cooperation, education, and joint democracy promotion,” the report says.

While reviewing India-Pakistan relations, the report recognizes Kashmir as a major dispute that has bedevilled relations between the two South Asian neighbours.

“India and Pakistan have been locked in a tense rivalry since the partition of the subcontinent upon achieving independence from Great Britain in 1947. The principal source of contention has been Kashmir, whose Hindu Maharaja at that time chose to join India, although a majority of his subjects were Muslim,” the report observes.

The report notes that India and Pakistan resumed the foreign-secretary-level talks in November 2006, after a three-month delay following the July 11, 2006 terrorist bombings in Mumbai.

“The meeting generated modest progress, with the two sides agreeing to establish a joint mechanism on counter-terrorism and agreeing to a follow-on meeting in February 2007,” the report says.