Geithner spoke after talks with Indian Finance Minister Pranab Mukherjee that underscored deepening ties but also U.S. pressure for New Delhi to expedite reforms.
Geithner cited barriers in India in sectors such as banking, insurance, manufacturing, multi-brand retail and infrastructure.
"Easing those barriers, which are limiting economic growth and job creation in both our countries would be an important step toward integrating our economies," he told a joint news conference. "We understand that addressing these barriers can be politically challenging, but the long-term benefits clearly outweigh the short-term challenges for both our countries."
Nevertheless, Mukherjee said there were huge opportunities for American companies in developing India's infrastructure, which requires $1 trillion in investment during the next five years, 50 percent of it from the private sector.
The Obama administration has made a strong push to deepen ties between the world's largest democracies. The U.S. views India as a strategic partner that shares American interests in managing China's rise, and also an expanding market for U.S. exports.
India introduced free market rules to deregulate its economy and ease state control in the early 1990s, spurring rapid growth in recent years, with growth of 8.5 percent in 2010, largely driven by domestic demand. Two-way trade with the U.S. has multiplied in the past decade, and reached nearly $50 billion last year.
Geithner said further economic and financial reforms were needed to attract investment to India from both within the country and abroad to drive further strong growth. He added that he was encouraged by Mukherjee's commitment to move forward with the reforms.
The ruling Congress Party, however, leads a coalition that has been shaken by corruption scandals. Doubts remain about its ability to push policies that could prove unpopular, particularly among poor voters who remain a vital constituency for the government.
Mukherjee said Monday the government is seeking a consensus among political parties for the passage of legislation on reform of the banking, insurance and pension fund sectors.
Tuesday's meeting was the second meeting of the U.S.-India Economic and Financial Partnership, billed as the highest-level economic talks yet between the two countries. Central bank chiefs and top regulators also attended.