At the end of a packed Sunday, the US President and his wife Michelle - who arrived on a three-day visit to India this morning - attended a state banquet hosted by President Pranab Mukherjee at the Rashtrapati Bhavan.

"Tonight I wanted to wear a Modi Kurta... I'm deeply honoured.I also want to thank you for not making me dance today," President Obama said in his address at the banquet, which was attended by 250 guests, including Prime Minister Narendra Modi, his ministers and winners of Padma awards. Former presidents APJ Abdul Kalam and Pratibha Patil are among the invitees.

At the joint press conference a few hours earlier, Prime Minister Modi and President Obama detailed the thrust of their talks this afternoon on India-US cooperation and announced an agreement on the nuclear liability issue that has stalled a deal for six years.

"Six years after we signed a bilateral agreement we are moving towards commercial viability," said Mr Modi. The US has reportedly withdrawn a demand to track the nuclear material it supplies to India, which New Dellhi had said was intrusive.

President Obama, speaking after PM Modi, said namaste and then in Hindi, "Mera pyar bhara namaskar." He thanked PM Modi for a 'chai pe charcha' (talks over tea) and said, "deepening ties with India will remain a top foreign policy priority" for the US.

Earlier, the two leaders walked together in the lawns of Delhi's Hyderabad House, deep in talks. They then sat down to tea that PM Modi poured, handing a cup to Mr Obama without a break in their conversation.

President Obama and his wife Michelle landed in Delhi a little before 10 this morning. In a departure from protocol, PM Modi received them at the airport. Mr Obama was given a 21-gun salute in a ceremonial welcome at the Rashtrapati Bhavan, where he greeted President Pranab Mukhejee and Prime Minister Narendra Modi with a 'namaste'.

"I am grateful for the extraordinary hospitality, it's a great honour to be back in India," the US President said after inspecting a Guard of Honour led by a woman officer of the Indian Air Force, Wing Commander Puja Thakur.

This afternoon, he also visited Rajghat where he paid tribute to Mahatma Gandhi and planted a sapling. Asked about his reception in India so far, Mr Obama said, "It's hard to match this one."