US Treasury Secretary John Snow has asked India to consider opening its financial, insurance and pension fund sector to foreign investors.
John Snow is on a five-day visit to India
Mr Snow, who is on a five-day visit to India, said opening of these sectors would provide funds to improve roads, railways, ports and power plants.
He met Indian business leaders and is scheduled to meet the PM and finance minister later in the week in Delhi.
The US is one of the largest investors in India.
Mr Snow told journalists after a visit to the National Stock Exchange in Mumbai (Bombay): "The financial sector is the nerve of any economy. It has so much potential here."
He said India could only benefit from greater openness.
"Infrastructure issues are at the forefront of India's future. But infrastructure needs to get financed," he said.
"US firms have opportunities here and we want to encourage the reform movement."
On Monday, Mr Snow had visited Asia's largest slum, Dharavi in Mumbai.
He also visited members of a women's organisation that uses micro-credit to finance small businesses as well as urgently needed housing.
An estimated 50% of Mumbai's population lives in shantytowns, open spaces or on pavements.
During his visit, Mr Snow is also expected to focus on the World Trade Organisation trade talks in Hong Kong in December.
India is an influential member of the WTO and the US wants it to use its influence to bring about a trade agreement in the 148-member organisation.