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Tony Abbott meets with Indian counterpart Narendra Modi in New Delhi

Prime Minister Tony Abbott has met his Indian counterpart Narendra Modi in an official ceremony at the Presidential Palace in New Delhi.

The pair shook hands and chatted briefly in front of reporters before a formal meeting later today where they are expected to sign a deal that will allow Australian companies to sell uranium to India.

India is not a signatory to the Nuclear-Non Proliferation Treaty but ahead of his trip Mr Abbott said Australia should be prepared to sell uranium to India under suitable safeguards.

"We want to put suitable safeguards in place," he said earlier this week.

"India is a fully functioning democracy with the rule of law and I think we should be prepared to support India."

However, nuclear observers and activists in India have claimed that the country's nuclear industry is secretive and unsafe.

India has 20 civilian nuclear power stations and plans to build dozens more in coming years.

During his meeting with the Indian leader, Mr Abbott is also expected to return a 900-year-old Dancing Shiva statue, purchased by the National Gallery of Australia for $5 million in 2008.

The statue had been stolen from a South Indian temple by a worldwide smuggling racket led by New York art dealer Subash Kapoor.

In Mumbai on Thursday, Mr Abbott foreshadowed closer economic and cultural ties between the two countries.

The Prime Minister, who is travelling with an Australian business delegation, said he was keen to negotiate a free trade deal with India once the Government finalised an agreement with China.

"This is already an important economic relationship. I want it to be far more important in the years and decades to come," he said.

Mr Abbott also announced 30 scholarships for Australian students to study in India as part of the New Colombo Plan.

Yesterday he met with Indian cricket legend Sachin Tendulkar at the Cricket Club of India, where he announced plans for a collection of Don Bradman's cricket memorabilia to tour India.