In a speech to the Indian parliament on Monday, Obama said that he looked forward to "a reformed UN Security Council that includes India as a permanent member".
India has been lobbying for a fixed seat on the UN's highest body for years, 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 increasing influence over issues from Doha trade to climate change talks.
"Let me suggest that with increased power comes increased responsibility," Obama said in his speech on his first official visit to the world's largest democracy.
'Defining moment'
Al Jazeera's Prerna Suri, reporting from New Delhi, said India is celebrating the endorsement from the US.
"Obama is really giving India everything it wanted from this visit. This is a defining moment in their relationship. For the first time the United States is actively backing India.
"Of course, there are many realistic people in the [Indian] administration. They know that without United Nation reforms, India's hopes of getting that seat are quite limited.
"But nonetheless, the party has begun here in India."
The foreign ministry in Islamabad, the Pakistani capital, was quick to denounce the US endorsement of India's UN bid.
In a written statement, it said: "India's aspirations for recognition as a global power notwithstanding, there are reasons enough to discredit this proposed direction of the process of UNSC reforms, such as India's conduct in relations with its neighbours and its continued flagrant violations of Security Council resolutions on Jammu & Kashmir."
The statement also says that Pakistan hopes the US will make a moral judgment, not based on "any temporary expediency or exigencies of power politics".
Business deals
Obama's trip with more than 200 US business executives, along with his UN 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 president is seeking to open up India's massive, yet often underdeveloped and restricted markets, in a bid to help counterbalance the rise of China.
During his three-day trip - the longest stay in any foreign country by Obama - the US leader announced $10bn in business deals between the two nations.
The president hopes that he will be able to reassure voters at home that countries like India offer benefits for US jobs rather than causing unemployment through outsourcing.
The UN move comes as India increasingly competes with China for global resources, from Africa to South America.But its economic assertiveness has often been accompanied by cautious diplomacy on issues like Myanmar and engagement with Iran.
Attaining the UN seat could face resistance from some of the UN Security Council's five permanent members - Britain, China, France, Russia and the United States.
Since the body's inception, the UN Security Council has had five permanent members, each with the power to veto resolutions.
It has been criticised for not reflecting global 21st century power.
'India has emerged'
The West is increasingly dependent on India and China to power their moribund economies and it is unclear how much Delhi will 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 Manmohan Singh, India's prime minister, 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 US will relax export controls over sensitive technology, another demand of India's.
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.
Francisco Sanchez, the US under secretary of Commerce for International Trade, said the US 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.
UN scepticism
For all the talk of a UN seat, it could take as much as a decade to achieve, with some in the US sceptical as India has often stood against the US in UN votes.
"The UNSC (UN Security Council) is not going to be reorganised in the next eight to 10 years," Gurmeet Karmal, the director of Centre for Land Warfare Studies, a New Delhi-based think-tank, said.
"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 US 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 has criticised US ally Pakistan over its failure to clamp down on fighters within its borders.
India has long expressed scepticism at US support for Pakistan, saying Islamabad is hoodwinking Washington by taking aid while also backing fighters in Afghanistan.
Singh appeared to rebuff calls by Obama for India and Pakistan, 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.
Source:Al Jazeera and agencies
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