Australian Prime Minister Julia Gillard has formally agreed with India's leader to start negotiations on a nuclear safeguards agreement, to allow Australia to start selling uranium to India.
Ms Gillard and India's leader Manmohan Singh agreed the move during the Australian leader's three day visit to India.
Mr Singh was meant to come to Perth for last year's Commonwealth Heads of Government Meeting, but pulled out, reportedly in retaliation for Labor's refusal to sell it uranium.
Ms Gillard later led the push to have Labor's ban on uranium sales overturned, a move Mr Singh praised.
"This is recognition of India's energy needs and as well as our record and credentials and I have expressed to Prime Minister Gillard India's appreciation of this development," he said.
At their meeting on Wednesday, the leaders also agreed to boost defence ties, including through naval exercises in the Indian Ocean, start negotiations on a prisoner transfer agreement and to hold annual formal prime ministerial meetings.
Mr Singh also thanked Ms Gillard for her government's response to the controversial attacks on Indian students in Melbourne in 2009 and 2010.
Ms Gillard said she believed Australia's reputation in India had improved significantly since her last visit in 2009, at the height of the controversy over the student attacks.