Conservative leaders Tony Abbott and Narendra Modi sealed a long-awaited nuclear energy deal on Friday, paving the way for Australia to sell uranium to India, crippled by power shortages and blackouts.

The two prime ministers hailed the deal as "a concrete symbol" of strengthening trade and strategic ties following their talks in the Indian capital.

The agreement signing came at the end of Abbott's two-day trip to India to meet fellow right-wing leader Modi, who rode to power in May on pledges to revive and reform India's ailing economy -- including by tackling its vast power problems.

Modi called the deal a "historic milestone" in the two countries' relationship that would help provide clean energy to India's 1.25-billion people.

Abbott said he "trusted" nuclear-armed India would use the uranium solely for peaceful purposes, following proliferation concerns.

"Australia trusts India to do the right thing in this area," Abbott said after the signing.

India and Australia kick-started negotiations on uranium sales in 2012 after Canberra lifted a long-time ban on exporting the valuable ore to New Delhi to meet its ambitious nuclear energy programme.

India, which is heavily dependent on coal, is struggling to produce enough power to meet rising energy demand as its economy and large middle-class expand.

Nearly 400 million Indians still have no access to electricity, according to the World Bank, and power outages are common.

India wants to ramp up the number of nuclear plants from the 20 operating at six sites. The country derives less than two percent of its total power capacity from nuclear sources.

Although two-way trade last year was only $15 billion, the new deal, along with a massive coal mine approved in Australia for one of India's biggest conglomerates, was a sign of future cooperation and potential, Abbott said.

"We (Australia) have been an utterly dependable source of energy security, resource security and food security," Abbott told Indian business leaders earlier Friday.

"I hope that we can become an utterly reliable source of energy, resource and food security for India too," he added.

- Mutual trust -

Australia, the world's third-biggest uranium producer, had previously ruled out uranium exports to India because New Delhi has not signed the global non-proliferation treaty.

Both India and its neighbouring rival Pakistan have nuclear weapons, and along with Israel and North Korea are the only countries not to have signed the non-proliferation treaty to prevent the spread of nuclear warheads.

Abbott reiterated Friday that his government has now received the necessary commitments from New Delhi that it would only use the ore for its civilian nuclear programme.

He said India and Australia both abided by the fundamental "ethical principle" to "play by the rules".

"This is why we can work together so easily and why we're ready to trust each other on issues like uranium safeguards."

Australia's decision to overturn its ban followed a landmark US agreement in 2008 to support India's civilian nuclear programme.

Under the agreement, India won exemption from the Nuclear Suppliers Group, which governs nuclear trade, allowing it to buy reactors and fuel from overseas, after decades of being treated as a pariah for building nuclear weapons.

Asked on Thursday about India's management of its nuclear power industry and safety standards, Abbott said it was "not our job to tell India how to conduct its internal affairs".

"Our job is to try to ensure we act in accordance with our own standards of decency and that's what we intend to do," he said.

During his meeting with Modi, Abbott handed back two centuries-old statues allegedly looted from Indian temples, ending a long-running battle over the pieces.

Abbott also met senior ministers in the Indian capital, visited a hospital trauma centre and announced $20 million in funding for India-Australian scientific projects.