NEW DELHI (Reuters) - U.S. President Barack Obama endorsed on Monday India’s long-held demand for a permanent seat on the U.N. Security Council, a reflection of the Asian country’s growing global weight and its challenge to rival China.

India says a seat on the council would reflect the importance of the G20 nation as its trillion dollar economy helps spur global growth and its government exerts more and more influence over issues from Doha trade to climate change talks.

“In the years ahead, I look forward to a reformed United Nations Security Council that includes India as a permanent member,” Obama said in a speech to India’s parliament on his first official visit to the world’s largest democracy.

“Let me suggest that with increased power comes increased responsibility,” he added at the end of the first leg of a 10-day Asian tour that has also been seen about gathering support from countries like India to exert pressure on China on its currency.

Ben Rhodes, White House deputy national security adviser, said ahead of Obama’s speech that “this was a full endorsement” for India’s permanent membership of a reformed Security Council.

In his three-day trip -- the longest stay in any foreign country by Obama -- the U.S. leader announced $10 billion in business deals, aiming at reassuring voters at home that countries like India offer benefits for U.S. jobs rather than causing unemployment through outsourcing.

The U.N. move comes as India increasingly competes with China for global resources, from Africa to Latin America. But its economic assertiveness has been often accompanied by cautious diplomacy on issues like Myanamar and engagement with Iran.

The U.N. seat could be a pipe dream and face resistance from some of the U.N. Security Council’s five permanent members -- Britain, China, France, Russia and the United States.

But it is Obama’s most headline-grabbing announcement in a visit that has seen the U.S. leader seek greater trade with India’s massive yet underdeveloped and restricted markets as well as to help counterbalance the rise of China.

The U.N. Security Council has since the body’s inception had five permanent members with the power to veto resolutions. It has been criticized for not reflecting global 21st century power.

Obama’s trip with more than 200 business executives, and his U.N. announcement, underscored the growing importance of India, which by 2020 is expected to be one of the five largest economies in the world, along with Asian powers China and Japan.

The West is increasingly dependent on India, and China to power their moribund economies. It was unclear how much Delhi would reciprocate by opening its economy more to foreign firms.

“I don’t think India is emerging. It has emerged. India is a key actor on the world stage,” Obama told a joint news conference with Prime Minister Manmohan Singh earlier on Monday.

Obama will also visit Indonesia, South Korea and Japan on the tour that will see Washington push to prevent countries unilaterally devaluing currencies to protect their exports, a top theme at the G20 summit in Seoul this week.

Obama has also announced the United States would relax export controls over sensitive technology, another demand of India’s.

It is unclear how much new Washington will get from India.

Sectors like retail and the financial services are restricted to foreign investors and there are few signs that Singh’s ruling Congress party has plans for any major reforms soon.

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U.S. Under Secretary of Commerce for International Trade Francisco Sanchez said the United States wanted greater market access to India’s infrastructure and energy sectors. India has targeted to spend $1 trillion over five years on upgrading its poor infrastructure, from potholed roads to log-jammed ports.

U.N, SCEPTICISM

For all the talk of a U.N. seat, it could take as much as a decade to achieve. Some in the United States have been skeptical as India has often stood against the United States in U.N. votes.

“The UNSC (U.S. Security Council) is not going to be reorganized in the next eight to 10 years,” said Gurmeet Karmal, director of Center for Land Warfare Studies, a New Delhi-based think-tank.

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“I do not think China will openly come in the way, but they will encourage some of its friends to vote against any such move.”

The U.S. leader also warned that India would have to take a more responsible role in international affairs, such as pressuring Myanmar to embrace democracy.

“India has often shied away from some of these issues. But speaking up for those that cannot do so for themselves is not interfering in the affairs of other countries.”

Obama is walking a diplomatic tightrope in New Delhi, on the one hand trying to boost diplomatic and business ties with India while on the other ensuring relations with Pakistan and China, nations often at loggerheads with India, stay stable.

He criticized U.S. ally Pakistan over its failure to clamp down on militants. India has long expressed skepticism at U.S. support for Pakistan, saying Islamabad is hoodwinking Washington by taking aid while also backing militants in Afghanistan.

“We will continue to insist to Pakistan’s leaders that terrorist safehavens within their borders are unacceptable and that the terrorists behind the Mumbai attacks be brought to justice,” he said.

But Singh appeared to rebuff calls by the U.S. president for the nuclear foes, who have gone to war three times since independence in 1947, to move forward on peace talks.

“You cannot simultaneously be talking and at the same time the terror machine is as active as ever before,” Singh said.