NEW DELHI (REUTERS) - Signalling his determination to take relations with the United States to a higher level, Indian Prime Minister Narendra Modi broke with protocol to meet and bear-hug US President Barack Obama as he landed in New Delhi on Sunday.

Obama's visit is a fresh bid to make India an enduring strategic partner and will nurture his friendship with a prime minister who a year ago was persona non grata in Washington.

Even before the first official meeting between the two leaders, Indian media reported that negotiators had struck a deal on civilian nuclear trade.

The NDTV news channel said the two sides had ironed out differences on the liability of suppliers in the event of an nuclear accident and on tracking of material supplied.

The White House declined to comment on the reports and the spokesman for India's Ministry of External Affairs said only "we hope for a positive outcome at the end of the day".

Obama will be the first US president to attend India's Republic Day parade, a show of military might long associated with the anti-Americanism of the Cold War, and will host a radio show with Modi.

His presence at Monday's parade at Modi's personal invitation is the latest revival in a roller-coaster relationship between the two largest democracies that just a year ago was in tatters. "It's a great honour. We are grateful for this extraordinary hospitality," Obama said during a formal welcome at the presidential palace, where there was a guard of honour, a 21-gun salute and a stray dog running around the forecourt until it was chased away.

Modi greeted Obama and his wife, Michelle, on the tarmac of the airport as they came down the steps from Air Force One on a smoggy winter morning. The two leaders hugged each other warmly.

According to protocol, the prime minister does not greet foreign leaders on their arrival, meeting them instead at the presidential palace. Modi made the decision himself to break with tradition and surprised even his own handlers, media reports said.

After his welcome at the palace, Obama laid a wreath at Raj Ghat, a memorial to Mahatma Gandhi, who is revered as the father of independent India.

The roads of New Delhi were lined with armed police and soldiers, part of a highly choreographed plan for the visit. Up to 40,000 security personnel have been deployed for the visit and 15,000 new closed-circuit surveillance cameras have been installed in the capital, according to media reports.

The two sides have worked to reach agreements on climate change, taxation and defence cooperation in time for the visit.

The United States views India as a vast market and potential counterweight to China's assertiveness in Asia, but frequently grows frustrated with the slow pace of economic reforms and unwillingness to side with Washington in international affairs.

India would like to see a new US approach to Pakistan, New Delhi's arch-foe.

Elected last May, Modi has injected a new vitality into the economy and foreign relations and, to Washington's delight, begun pushing back against China's growing presence in South Asia.

Annual bilateral trade of US$100 billion (S$134 billion) is seen as vastly below potential and Washington wants it to grow fivefold.

The White House said Obama will depart slightly early from India to travel to Saudi Arabia following the death of King Abdullah, instead of a planned visit to the Taj Mahal.

MODEST ROOTS

Like Obama, Modi rose from a modest home to break into a political elite dominated by powerful families. Aides say the two men bonded in Washington in September when Obama took Modi to the memorial of Martin Luther King, whose rights struggle was inspired by India's Mahatma Gandhi.

The "chemistry" aides describe is striking because Modi's politics is considerably to the right of Obama's, and because he was banned from visiting the United States for nearly a decade after deadly Hindu-Muslim riots in a state he governed.

Obama, the first sitting US president to visit India twice, also enjoyed a close friendship with Modi's predecessor Manmohan Singh, who in 2008 staked his premiership on a controversial deal that made India the sixth "legitimate" atomic power and marked a high point in Indo-US relations.

The nuclear deal failed to deliver on a promise of billions of dollars of business for US companies because of India's reluctance to pass legislation shielding suppliers from liability, a deviation from international norms.

In a reminder that personal chemistry is not always enough, ties between Washington and India descended into bickering over protectionism that culminated in a fiery diplomatic spat in 2013 and the abrupt departure of the US ambassador from New Delhi, who has only just been replaced.