By Manish Chand,

Tokyo, Dec 15 IANS) India and Japan Friday announced a "major transformation" in their ties centred around a defining economic partnership but could not move forward on the crucial issue of civil nuclear cooperation.

After talks between visiting Indian Prime Minister Manmohan Singh and Japanese Prime Minister Shinzo Abe, the two leaders spoke glowingly about the new phase in their bilateral ties though the latter's cautious stance on the prospect of civilian nuclear cooperation came as a dampener for India.

Contrary to expectations on the Indian side, Abe said that Japan would much rather wait for India to complete its negotiations with the International Atomic Energy Agency (IAEA) before it makes up its point on backing civil nuclear cooperation with New Delhi at the Nuclear Suppliers Group (NSG).

He stressed on Japan's sensitivities on the nuclear issue, but kept the door open for a possible future engagement in this area.

"Japan is the only victim of atomic bombs. We have our sensitivities on the issue," Abe told reporters when asked by a Japanese journalist on what he thought of the India-US civil nuclear legislation that was approved by the US Congress recently.

"India should respond to concerns of the international community and to concerns of the International Atomic Energy Agency," the Japanese prime minister said while referring to discussions he had on the nuclear issue with Manmohan Singh. "He had explained to me that as India grows and develops, there will be an increasing demand for energy. Nuclear energy is a must for India," Abe quoted Manmohan Singh as telling him.

Manmohan Singh also told him about the safeguards agreement India was planning to negotiate with the IAEA.

"In the 45-nation NSG, Japan will be actively involved in this debate. We are in the process of putting together the position of the Japanese government on the issue," he said.

Ahead of the talks between Manmohan Singh and Abe, a top Japanese official had said that Japan would wait for India to complete its negotiations with the IAEA in a "bona fide manner" before it makes up its mind on backing civil nuclear cooperation with New Delhi at the Nuclear Suppliers Group. He also stressed that Japan will need "some more time" to take a call on supporting India at the NSG.

Japan, a fiercely pacifist country that abides by three non-nuclear principles of no possession, no production and no presence of nuclear weapons on its soil, is the first NSG country Manmohan Singh is visiting after the US Congress enacted a landmark legislation approving civil nuclear cooperation with India recently.

Despite Tokyo's reservations over the nuclear issue, Manmohan Singh said: "India-Japan relations are poised for a major transformation. We have decided to seize this historic moment."

The new partnership, as announced by the two sides, will also include enhanced defence and technological cooperation and a quantum increase in cultural ties, educational linkages and people to people contacts.

"It is driven by long-term political, economic and strategic interests, aspirations and concerns and underpinned by a common commitment to democracy, open society, human rights, rule of law and free market economy," said a joint statement issued after the talks.

The two prime ministers said their partnership will play an active role in promoting peace, stability and prosperity in Asia. India and Japan will launch negotiations on a Comprehensive Economic Partnership Agreement (CEPA) next year and are hopeful of concluding it in two years.

Abe sounded equally upbeat about the future of India-Japan relations and its potential for recasting the economic and strategic landscape of Asia. "A strong and prosperous India is in Japan's interest and will benefit Asia. We should assist the economic development of India. This bilateral relationship is the one with the highest potential," he stressed.