The Obama administration is encouraging the Indian government to find a solution that allows US firms to contribute to India’s nuclear energy needs, a US official said on Monday.

US industry, analysts and administration officials say legislation approved recently by both Houses of Parliament, which puts liability in the case of a nuclear accident on the supplier of the technology and raw materials, deters such participation.

“We continue to encourage the Indian government to provide domestic and international suppliers, including, of course, American suppliers, the opportunity to help India to meet its ambitious nuclear power generation goals,” Assistant Secretary of State for South and Central Asian Affairs, Robert O. Blake, told reporters at a conference call.

Blake said the administration had taken note of concerns raised by industry representatives over some of the provisions of the legislation and that it may be inconsistent with international standards. “We look forward to working with the Indian government to work our way through this and arrive at a solution where American industry can contribute to India’s ambitious civil nuclear energy needs,” he added.

The liability issue was raised at External Affairs Minister SM Krishna’s meeting with Secretary of State Hillary Rodham Clinton in New York on Monday. Blake declined to characterise the issue as an “irritant” in US-India relations, but said it was an “important priority for the United States.”

The issue of inclusion also came up in the Krishna-Clinton meeting and is expected to be raised by Defence Minister AK Antony at his meetings in Washington on Tuesday.

Blake said the US and India are not yet near a positive resolution on the issue of export controls. “We are not quite there yet and so we need to continue to work on that,” he said, adding that he was confident of a positive outcome.

On the eve of his meetings, Antony described export controls that restrict the sale of defence technologies to blacklisted Indian entities as a “matter of concern.” He urged an early solution. Antony will meet Clinton, Defence Secretary Robert M. Gates and National Security Adviser Jim Jones.

The Entity List, published by the US Commerce Department’s Bureau of Industry and Security, is intended to inform the public of entities that have engaged in activities that could result in an increased risk of the diversion of exported technology to weapons of mass destruction programmes.

Indian institutions on this list include subordinates of the Defence Research and Development Organisation and Indian Space Research Organisation and the Department of Atomic Energy entities, including the Bhabha Atomic Research Centre. They were placed on the list after India, which is not a signatory to the nuclear Non-Proliferation Treaty, conducted nuclear tests in 1998.