and scale up cost-effective innovations and best practices in development in India with the potential for global impact, it said.
"The India platform could serve as a new model for other emerging middle-income countries with significant pockets of poverty.
"India also faces both internal and external security challenges, and US assistance continues to support its critical role as a leader in maintaining regional stability," the State Department said in its report to the Congress.
It said in the year 2013, the US will deepen cooperation on counterterrorism issues with both capacity building activities and policy dialogues.
According to the State Department, USAID and India is currently developing its new five-year strategy.
With India as a development innovation lab, USAID and its partners will identify, pilot, and scale cost-effective innovations and practices with potential for global impact.
In recognition of India's unique position as an emerging global power, the US Government will collaborate with the public and private sectors to support transformational agricultural innovations like pest-resistant seed production higher yield crops, and innovations in harvesting and food distribution networks, the State Department said.
The US will also use its developmental assistance to support innovations in literacy and to improve the quality of basic education in India.
"The United States will continue to strengthen basic education in India and will support innovations in early grade reading," it said.
Noting that India has successfully attained 96 per cent enrollment in the primary grades, the State Department said, the quality of education however lags, with 52 per cent of students in grade five not reading at a second grade level.
USAID will work with public and private partners in India to catalyse innovations in early grade reading that address not only India's challenges, but can also be applied globally.
Observing that India has been the victim of attacks by international terrorist groups that are also hostile toward the US, the State Department told the Congress that strengthening India's strategic trade control systems and building greater Indian conventional military capacity will create a stronger partner to address regional and global challenges.
Further, the Department of State programs will improve India's capabilities to counter terrorism, address terrorism financing,