US Secretary of State John Kerry told Narendra Modi that India's refusal to ratify a key WTO trade deal sent the wrong message, as he met the country's new prime minister for the first time on Friday.
Kerry expressed optimism about expanding cooperation between the world's two largest democracies during a first visit aimed at reviving a relationship clouded by mistrust.
But a raft of disputes has cast a shadow over hopes for a warmer relationship, with India on Thursday blocking a major World Trade Organization pact to streamline customs procedures and boost global commerce.
During the meeting -- aimed at breaking the ice with a leader once shunned by Washington -- Kerry told Modi India's stance was at odds with his desire to open up the country's economy.
"We note that the prime minister is very focused on his signal of open to business and creating opportunities and therefore the failure of implementing TFA (Trade Facilitation Agreement) sends a confusing signal and undermines that very message that he is seeking to send about India," a US official quoted Kerry as saying.
"While we understand India's food security concerns, the Trade Facilitation Agreement is one that will bring tremendous benefit, particularly to the world's poor. India's actions therefore are not in keeping with the prime minister's vision."
But Modi told Kerry developed nations needed to display greater understanding of the difficulties faced by the developing world in meeting the needs of their poor populations.
"The prime minister emphasized the need for developed countries to understand the challenges of poverty in developing countries and their governments' responsibilities in addressing them...," a statement issued by Modi's office said.
The Press Trust of India national news agency, meanwhile, quoted commerce ministry officials as saying India remains committed to the deal as long as its demands for concessions on its anti-poverty food stockpiling deal are met.
The WTO meets again in September and "we are prepared to engage on day one with a clear understanding that our position with regard to food security and our commitment to Trade Facilitation Agreement (TFA) is 100 percent firm," said the official, who could not be named due to ministry rules.
- 'Critical to build trust' -
Kerry urged India to work with the United States to move the WTO process forward, the official said.
Speaking on condition of anonymity, the official also said Modi told Kerry while areas of difference would always exist, "what is critical is what we do to enhance and build on our trust".
Earlier, Kerry said the United States wanted to "try to really take the relationship to a new place", following a series of diplomatic spats with India.
Washington has had little relationship with Modi, a Hindu nationalist who was refused a US visa in 2005 over allegations he turned a blind eye to anti-Muslim riots as leader of the western state of Gujarat.
The United States caught up with other Western nations during the election campaign, sending its ambassador to meet Modi who since taking office has shown no visible signs of holding a grudge over his past treatment.
But US officials, who value frank and free-wheeling relationships with foreign leaders, are unsure what to expect from Modi who is known for his austere, solitary lifestyle.
Modi, who as a young man wandered the Himalayas, is seen as a very different character than his predecessor Manmohan Singh, a bookish Oxford-educated economist with whom President Barack Obama had found a kinship.
- Break from Middle East efforts -
Kerry has nurtured personal relationships as he pursues key goals including seeking peace in the Middle East.
The top US diplomat went ahead with the trip to India despite working around the clock to end the bloodshed in the Gaza Strip.
Just hours before his scheduled meeting, Kerry announced a 72-hour ceasefire between Israel and Hamas but the humanitarian truce collapsed only hours after it began Friday amid a deadly new wave of violence.
The United States has sought to put relations with India on firmer ground after the Modi visa row and a crisis in December when US authorities arrested an Indian diplomat for allegedly mistreating her servant, infuriating New Delhi.
But new disputes have kept arising.
Late Thursday, the WTO said the 160-member body had failed to approve the landmark customs pact.
India stalled the deal as it pushed for a WTO green light on the developing power's stockpiling of subsidised food. India says the policy is vital to help the poor, but rich nations charge the practice distorts global trade.
The United States voiced "disappointment" and "regret" over India's stance, while India said it protested to Kerry over reports from former NSA contractor Edward Snowden that US intelligence snooped on Modi's Bharatiya Janata Party while it was in opposition.
US officials, however, have signalled they do not want to create a new rift by renewing past concerns about Modi's track record on minority rights.
Kerry trod lightly on the issue on Thursday, saying the two democracies shared the belief "every citizen, no matter their background, no matter their beliefs, can make their full contribution".
"From women's rights to minority rights, there is room to go further for both of us," Kerry said.