India and Australia agreed Wednesday to begin negotiations on civil nuclear energy cooperation that would eventually allow the export of Australian uranium to the energy-starved South Asian nation.

Australian Prime Minister Julia Gillard met with her Indian counterpart Manmohan Singh on the last day of a three-day visit. They discussed strategic and economic ties in addition to nuclear energy.

Singh said Australia's agreement to start negotiations that would lead to the sale of uranium was a "recognition of India's energy needs as well as our record and credentials."

Australia has had a long-standing ban on exporting uranium to countries that have not signed the Nuclear Nonproliferation Treaty. India is among those countries.

Australia has 40 percent of the world's known uranium reserves but sells uranium only for power generation under strict conditions.

India has been desperately seeking uranium sources to run its nuclear power plants, and Australia's past refusal to sell the mineral has been a sore point in relations between the two countries.

India has refused to sign the Nuclear Nonproliferation Treaty, saying it discriminates against countries that carried out tests after the treaty came into force in 1970.

Uranium sales to India will be possible once the two countries reach agreement on a nuclear safeguard arrangement, with India giving assurances that the uranium will not be diverted to its military program.

Earlier Wednesday Gillard told business leaders in New Delhi that there was "good potential for partnership in the energy sector."

Gillard said she expects discussions on uranium sales to last one to two years.

The two leaders also discussed defense cooperation, terrorism and ways to boost trade.

"We want to work together to strengthen our economic partnership and strengthen our strategic partnership," Gillard said.

Trade between the two countries grew from $4 billion in 2000 to more than $20 billion last year. India is Australia's fourth-biggest market, and trade is expected to double to $40 billion by 2015.

"There is great potential to further strengthen India-Australian bilateral trade and investment," Singh told reporters.

Australian universities are trying hard to entice Indian students to return to Australia to pursue college or professional degrees. The number of Indian students studying in Australia fell after a series of racial attacks that spiked in 2009.

Gillard also announced that Australia will confer its highest civilian honor, the Order of Australia, on Indian cricket wizard Sachin Tendulkar, a decision that will go down well in cricket-mad India.

"This is a very special honor that is very rarely awarded to someone who is not an Australian citizen," Gillard said.