Prime Minister Tony Abbott has signed a deal with India that will pave the way for Australian companies to export uranium to the country.
Mr Abbott announced details of the new agreement following a meeting with India's Prime Minister, Narendra Modi in New Delhi.
Mr Modi said the new deal would open a new chapter in bilateral cooperation between the countries.
"It is a reflection of a new level of mutual trust and confidence in our relationship,” he said.
The deal provides access to a rapidly expanding market for producers such as BHP Billiton and Energy Resources of Australia, which is 68 per cent owned by Rio Tinto.
There are concerns that some of the uranium will be used to produce nuclear weapons in India, however Mr Abbott was confident India “would do the right thing in this area.”
"India has an absolutely impeccable non-proliferation record," he said.
India remains a non-signatory to the Nuclear Non-Proliferation Treaty and is believed to have stores of about 100 nuclear warheads.
Australia had previously banned the sale of uranium to the country. Under the new deal, shipments could begin within five years.
Safeguards in place
Uranium sold to India will be intended for power generation and Australian officials are confident there are enough safeguards in place to ensure it is not diverted to a nuclear weapons program.
Mr Abbott is the first world leader to be accorded a full state visit in New Delhi following Mr Modi’s election victory in May, underlining the growing importance of ties between the countries.
Both leaders pledged to increase economic and strategic ties and said there was room for improvement in the relationship.
Trade between the countries has tripled over the past decade as Indian demand for Australian coal and other commodities surged.
However Mr Modi said he was concerned about the decline in bilateral trade in the last two years.
Two-way trade stands at $15 billion per year – about one-tenth of Australia's trade with China.
"Prime Minister Abbott has been supportive of Indian investors in Australia and has assured me of speedy clearances for Indian investment proposals in the pipeline," Mr Modi said.
"I invite Australian investments into India, including in infrastructure and high technology areas."
Resurgence in atomic energy sector
Mr Modi will come to Australia for the G20 summit in Brisbane in November, which will be the first time an Indian leader has visited Australia in more than two decades.
The Minerals Council of Australia said the deal was a sign of a resurgence in the atomic energy sector.
“A rebound in the global nuclear industry, led by demand from China and India, will see Australia’s uranium exports grow from A$630m in 2013-14 to about A$1.1bn by 2019,” it said.
Australia has a third of the world’s known uranium resources but provides just 11 per cent of global supply.
It has a strategy to expand the sector following the repeal of bans on uranium mining in Queensland and Western Australia.