India and France have signed an agreement to pursue civilian nuclear co-operation "for peaceful purposes".
The declaration was signed following talks in Delhi between visiting French President Jacques Chirac and Indian Prime Minister Manmohan Singh.
The BBC's Nick Bryant says the visit comes at a particularly delicate time.
Last week France recalled a decommissioned warship heading for a ship-breaking yard in India, following environmental concerns.
The French president has also become involved in a row over a hostile bid by Indian-born billionaire Lakshmi Mittal to take over Luxembourg-based steel-maker Arcelor.
"India's access to civilian-nuclear technology ... is indeed necessary in order to drive and fuel India's economic development"
Mr Chirac said on Monday that in principle France had absolutely "nothing against a non-European taking over a European company".
"The concerns that have been expressed are entirely legitimate. I do not understand what the fuss is about," he said.
The Indian prime minister raised the issue with Mr Chirac in their talks, he said.
Nuclear deal
India and France signed nine agreements, including ones on defence, trade and tourism.
The nuclear agreement means that France will support India's attempts to gain access to nuclear fuel and civilian technology to fuel its growing energy needs.
"India's access to civilian-nuclear technology... is indeed necessary in order to drive and fuel India's economic development," President Chirac said.
"We appreciate France's support for the ongoing effort to enable full civilian nuclear energy co-operation between India and the international community," Mr Singh said at a joint news conference with Mr Chirac.
Our correspondent says a firmer and more detailed nuclear energy agreement between the two countries will have to await the outcome of talks between India and the United States over a landmark deal to supply Delhi with much needed nuclear technology.
Talks with Washington have been deadlocked over a plan to separate India's civilian and military nuclear facilities - essential for the agreement to be sealed by the US Congress.
Both sides hope to sort out their differences before US President George W Bush visits India next month.
Cementing ties
France is also hoping to strike key defence deals with India which is in the market for 126 new warplanes, a purchase worth billions of dollars.
The French-made Mirage fighter-jet is hoping to win over its rivals from the US, Russia and Sweden.
A deal for the supply of 43 Airbus commercial aircraft to state-run Indian airlines was also signed during the visit in a deal estimated at $2.5bn.
Trade between the two countries is limited to $2.99bn according to the Confederation of Indian Industry and both sides are hoping to extend it further.
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