Singh in Berlin

The German chancellor told reporters in Berlin that India and Germany had "taken a step closer together," while conceding that they still had not reached the point "where the two countries' expectations lie."

Merkel also expressed cautious optimism regarding the long-sought free trade deal between the European Union and India.

"Now there is a situation, in which such a deal appears attainable," Merkel said. "But we have not yet overcome all the problems."

Among EU countries, Germany enjoys the largest volume of trade with India, an emergent economy of more than a billion people.

Merkel mentioned issues including rules for the automotive industry, intellectual property rights, insurance and the service sector as outstanding areas where agreements were required.

Prime Minister Manmohan Singh, greeted with military honors in Berlin, also expressed hope that a free trade deal was now within reach. He urged the eurozone to continue efforts to bring its sovereign debt troubles under control, saying that a "strong and robust eurozone is in the interest of all developing countries."

Atomic energy only for Iran

Merkel also mentioned the latest round of talks between Iran and world powers in Kazakhstan, which ended without an agreement.

"We are working towards there being no nuclear proliferation," Merkel said, saying her government was disappointed at the lack of progress in Almaty.

Singh pointed to Iran's responsibilities as a signatory to the Nuclear Non-Proliferation Treaty, signed by 190 countries around the world. However, the Indian prime minister also said that the government in Tehran had a right to enrich uranium in order to generate atomic energy. New Delhi, for its part, has not signed the Non-Proliferation Treaty.

Iran says that its nuclear program is for peaceful power generation only, a claim met with skepticism by several countries, most notably Israel.

With six million Indians living in the Gulf region, Singh said, any growing instability would negatively affect India's economy at home.

The two leaders also appealed for an end to fighting in war-torn Syria and calm on the Korean peninsula.

msh/ccp (AFP, dpa, Reuters)