The issue arose during talks in New York between US Secretary of State Hillary Clinton and Indian Foreign Minister S.M. Krishna, which were meant to lay the groundwork for President Barack Obama's visit to New Delhi.

The United States and India in 2008 signed an agreement to open the way for cooperation in nuclear energy, a landmark step for the world's two largest democracies, which had prickly relations during the Cold War.

In hopes of meeting companies' concerns, India's parliament recently approved legislation to spell out their liabilities in the event of an accident, but some critics say the bill will instead discourage investment.

"We've taken note of some of the concerns that industry representatives have raised about some of the provisions of the liability bill and that the bill may possibly be inconsistent with international standards," said Robert Blake, the US assistant secretary of state for South Asia.

"We look forward to working with the Indian government to work our way through this and arrive at a solution where American industry can contribute to India's ambitious civil nuclear energy needs," Blake told reporters.

A clause in the legislation allows nuclear power plant operators to pursue suppliers of equipment, raw materials and services for 80 years after the construction of any plant in the event of an accident.

Opponents of weaker versions of the bill wanted to avoid a repeat of problems following the 1984 industrial disaster in Bhopal, central India, which involved US firm Union Carbide.

Obama plans in November to pay his first presidential visit to India, where many policymakers remain fond of his predecessor George W. Bush.

The Obama administration has vowed to build a broad global partnership with India, but some in New Delhi have been uneasy by Obama's early focus on China and Pakistan.

Blake said that Clinton and Krishna "agreed that the president's visit will be a defining moment in the history of our bilateral relations."

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