"The United States is a great power and India is potentially a great power," said Rajat Gupta, Worldwide Managing Director of McKinsey and Company. "Now to put the US-India relationship in a comfortable place it has to be in an economic setting, through trade and investment."

Gupta spoke at a panel titled "India and the US: A Growing Partnership" during the 17th India Economic Summit, an annual meeting organized by the Confederation of Indian Industry and the World Economic Forum. Naresh Chandra, former Indian ambassador to the US, Richard Haass, Director of Policy Planning in the US State Department and Prodipto Ghosh, Additional Secretary to the Indian Prime Minister were the other panelists. Indo-US relations, both political and economic, have improved by leaps and bounds, especially following former US President Bill Clinton's visit to India in 2000.

Haass, who has been involved with India for the last 25 years, said that "the US-Indian relationship is in the best condition that it has ever been in." Indian Prime Minister Atal Bihari Vajpayee visited Washington DC in November, promising increased cooperation and dialogue between the two countries. US President George W. Bush and Vajpayee agreed to cooperate in a number of areas including the war against terrorism in Afghanistan, defense and intelligence and in the realm of economics.

"Given the size of the US and Indian economies," said Haass, "The economic relationship between the two countries is seriously underdeveloped. What we trade in one year together is on the level of what the US and Mexico do in a matter of weeks. That is simply wrong."

According to him India has to make significant changes in its economic policies to foster trade and improve economic ties between the two. "On balance, I think it is India that must do more to open up its economy," he said. He added, however, that it was a "joint challenge for both countries to meaningfully develop interaction on the economic side."

Another means to boost the Indian economy and improve Indo-US ties is encouraging the Indian Diaspora in the US to invest in their country of origin, said Gupta. The Non-Resident Indian (NRI) population in the US has a total income of $180 billion, he said, which would make it the 28th richest economy in the world, adding, "The NRI population could be a key catalyst in Indo-US relations.

In the meantime ties between these two "great democracies" are improving over the handling of the Afghanistan situation, said Haass.

"What is sometimes forgotten is that over 200 Indians died [in the World Trade Center attacks]," he said. "The strong sympathetic reaction from the Indian government was greatly appreciated. Now India has brought tremendous expertise and experience to the Afghanistan situation and US and India share the basic goals of getting rid of the Al-Qaeda network."

Reports from Afghanistan suggest that many Taliban fighters have escaped into Pakistan and there is some concern in India that they will join terrorist actions in Kashmir. Haass said a lot of work was being done to ensure this does not happen.

"In no way do we want to see the problem transplanted," he said. "We are doing our best to make sure the borders are closed and that the terrorists do not leave Afghanistan. Where we are unsuccessful we will work with host governments to make sure they cannot set up [camps]." Currently the US military is using bases in Pakistan to aid the efforts in Afghanistan while reports suggest that Pakistani army regulars are among the Taliban fighters.

Haass said he foresees an important role for India in the reconstruction of Afghanistan. While India has already offered considerable relief assistance, he said it would also have a role in the actual implementation of reconstruction programs. Indian experts and advisers would be well accepted in the post-Taliban Afghanistan, he added.

Meanwhile on Tuesday Vajpayee called an all-party meeting in Delhi to debate a new anti-terrorism bill called the Prevention of Terrorism Ordinance (POTO). The legislation grants police and paramilitary forces wide-ranging powers to arrest suspected terrorists and raid suspected hideouts. Members of the Opposition have fiercely opposed POTO, calling it 'draconian' and 'anti-Muslim.' The legislation mirrors a similar move in the United States where a new anti-terrorism bill passed in October gives lawmakers far-reaching and comprehensive powers to trace and arrest terrorists.