Narendra Modi broke with protocol to meet President Obama personally at the airport in Delhi
The US and India have announced a breakthrough on a pact that will allow American companies to supply India with civilian nuclear technology.
It came on the first day of President Barack Obama's visit to India.
The nuclear deal had been held up for six years amid concerns over the liability for any nuclear accident.
Indian Prime Minister Narendra Modi said the nations were embarking on a "new journey" of co-operation, with stronger defence and trade ties.
Mr Obama said that the nations had declared a new friendship.
The nuclear pact had been agreed in 2008 but the US was worried about Indian laws on liability over any accidents.
Now, a large insurance pool will be set up, without the need for any further legislation.
US ambassador Richard Verma said: "It opens the door for US and other companies to come forward and actually help India towards developing nuclear power and support its non carbon-based energy production."
The BBC's Sanjoy Majumder in Delhi says the sides also agreed to increase their bilateral trade five times, from the current $100bn (£66.7bn) a year. The US will also sell more military hardware to India.
Earlier, Mr Modi stressed the importance of the visit by breaking with protocol to receive Mr Obama personally at Delhi airport.
He said the two nations would increase cooperation on defence projects and on "eliminating terrorist safe havens and on bringing terrorists to justice".
The BBC's Geeta Pandey in Delhi says security around the Republic Day parade is generally tight, but this year the high-profile visit has taken preparations to a new level.