 India has pledged to open civilian nuclear sites to inspection |
Two days of talks between Indian and US officials in Washington ended on Tuesday having made "extensive progress", the State Department said.
Agreement was struck in July 2005 but details still need to be finalised.
The talks have been slowed by differences over India's right to test weapons and reprocess spent fuel.
Under the deal, energy-hungry India would import US civilian nuclear fuel, even though it has not signed the Non-Proliferation Treaty (NPT).
Some critics of the deal say it could boost India's nuclear arsenal. They say it sends the wrong message to countries like Iran, whose nuclear ambitions Washington opposes.
India has made clear that the final agreement must not bind it to supporting US policy on Iran or prevent it from developing its own fissile material.
The Indian Foreign Secretary Shivshankar Menon, in comments to the BBC, described Tuesday's talks as "productive" and the proposed nuclear agreement "a still do-able deal".
'Frustrated'
India and the US were once on opposite sides of the Cold War fence, but are now close allies.
US President George W Bush and Indian Prime Minister Manmohan Singh said they had finalised the accord during the former's visit to India last March.
 | NUCLEAR POWER IN INDIA India has 14 reactors in commercial operation and nine under construction Nuclear power supplies about 3% of India's electricity By 2050, nuclear power is expected to provide 25% of the country's electricity India has limited coal and uranium reserves Its huge thorium reserves - about 25% of the world's total - are expected to fuel its nuclear power programme long-term Source: Uranium Information Center |
It was then approved by the US Congress and signed into law by President Bush in December.
But India's government has faced criticism at home that the deal will compromise its nuclear independence.
One crucial sticking point is over a clause saying the US would withdraw fuel and equipment if India breached its unilateral moratorium on nuclear tests.
India's military says a future nuclear test by Pakistan or China could compel it to follow suit.
Another key area of difference is over reprocessing. India wants complete freedom to process all of its spent fuel, while the US argues that material it provides must not used for military purposes, the BBC's Shahzeb Jillani in Washington says.
Under the agreement, India will get access to US civil nuclear technology and fuel, in return for opening its civilian nuclear facilities to inspection.
But its nuclear weapons sites will remain off-limits.
Few details
Our correspondent says negotiators on both sides are under real pressure after several rounds of inconclusive talks over the past four months.
Officials in Washington struck an upbeat note after the talks but gave few concrete details of what had been achieved.
US undersecretary of state Nicholas Burns is to go to India "in the second half of May to reach a final agreement", state department spokesman Sean McCormack said in a statement.
"We look forward to resolving the outstanding issues in the weeks ahead," his statement said.
Last month, Mr Burns admitted to being frustrated at the slow pace of the talks.
Before the agreement actually starts working:
The US Congress must ratify the final terms of the deal The International Atomic Energy Agency has to approve a separate nuclear inspection programme The Nuclear Suppliers Group, an assembly of nations that exports nuclear material, has to give its approval.
