The United States has removed some export restrictions on six Indian civilian nuclear and space facilities.
India is looking at nuclear power to meet its energy needs
The facilities will now be allowed to purchase sensitive technology from the US without being subject to special licenses, reports say.
Washington had imposed sanctions on India following its nuclear tests in May 1998.
But earlier this year it agreed to increase co-operation on civilian nuclear energy programmes.
In a statement, the US embassy in Delhi said it expected the move to boost high-technology trade between the two countries.
"This is a tangible result that delivers on President Bush's commitment to strengthen strategic and commercial relations between the United States and India," Ambassador David Mulford said.
The US has also dropped restrictions on the export of items to India that it fears may be used for nuclear weapons but are not covered by the Nuclear Non-proliferation Treaty.
India has not yet signed the NPT.
The US and India are developing closer ties
"These changes are important because they will increase high-technology trade between the two countries," the US embassy statement said.
Three nuclear energy plants in the states of Maharashtra, Rajasthan and Tamil Nadu stand to benefit from the US decision to remove export controls.
All three facilities are subject to International Atomic Energy Agency (IAEA) safeguards.
Facilities belonging to the Indian Space Research Organisation and the Space Applications Centre will also benefit.
The decision to enhance civilian nuclear energy cooperation was reached during a visit by Indian Prime Minister Manmohan Singh to Washington in July.
It signalled a new strategic alliance between the two democracies.
India and the US have drawn closer in the past few years, after being on opposite sides of the Cold War fence.
Delhi has also been keen on looking at nuclear power as a way to address its growing energy needs.