The issue is expected to be discussed next month in Chicago, when Commerce Minister Kamal Nath is scheduled to meet US Trade Representative Susan Schwab.

"In the private sector, we are hopeful of moving forward to pursue and conclude a mutually beneficial agreement between India and the United States. India has negotiated many investment agreements with countries around the world, in Europe and Canada," said Ambassador Susan Esserman, former Deputy US Trade Representative and currently with Steptoe and Johnson.

"Given the increased stature of our relationship, the incredible increased investment on both sides it would be the appropriate logical next step. And we in the private sector are very enthusiastic about this possibility," Esserman said at the US Chamber of Commerce.

"We think there is a great deal of opportunity to benefit both sides reaching a mutually agreeable investment agreement," she added.

"We are at the very beginning of the discussions... we see great opportunities for enhanced investment in India," Esserman said making the point that an investment agreement will be "beneficial" to facilitate investment in many areas like infrastructure.

"This is a good logical next step that really builds where we are in the bilateral economic relationship. There is so much investment flowing from both sides to the other side, so this really makes sense," Esserman maintained.

She brushed aside the notion that the bilateral investment agreement would undercut the WTO's Doha Round or is intended to get around the multilateral accord.

"No. Absolutely not. This (bilateral investment agreement) can move independently. This is what makes sense for our relationship moving forward today. But this is no way exclusive of a successful conclusion of a WTO Round Agreement... The investment agreement is complimentary and not exclusive of that," Esserman maintained.

"India is a rule of law country; we are a rule of law country; democratic countries; and this is the kind of agreement that makes sense given our two systems," she said.

Ron Somers, President of the United States India Business Council, said that The Private Sector Advisory Group has agreed in the Vision Statement to advance a bilateral investment agreement between the economies of India and the United States.

"This will accelerate and deepen the flow of investment between the two countries both ways. This is a two way street. So we are on that track," Somers said.