"When it comes to India, I think Mr Chidambaram has done a great job at telling and showing the world that India is open for business," Osborne told select Indian journalists after his meeting with the Finance Minister.
Giving a resounding thumbs up to India's reform initiatives, Osborne said, "I think people had some questions a year or two ago but Mr Chidambaram has settled those doubts and the reforms he has proposed the retail reforms, pension bill, among others are a real sign of India's commitment to wanting to trade with the world. I think he has single handedly made a huge contribution and we are honoured that we are able to host him today".
Since taking office last July, Finance Minister P Chidambaram has championed reforms and hit the road to woo investors in Asia, Europe and North America.
Chidambaram donned a hard hat during a visit to a new Crossrail station project in east London.
He was shown around the upcoming mega high-frequency railway project by Osborne, who gave a resounding thumbs up to India's reform initiatives.
The Indian Finance Minister is on a three-nation tour to UK, France and Qatar to sell India's growth story and attract foreign investments.
The meeting of the two finance ministers followed Chidambaram's closed-door meetings with potential British investors into India.
Asked about the progress on the India-EU Free Trade Agreement (FTA), the Chancellor said, "We have spoken about the India-EU FTA and we will be speaking about it further. I think the FTA will be a real sign that India wants to engage with the rest of the world and that Europe, which has had its own very severe economic problems, is undertaking the reforms necessary."
Osborne said Britain is probably the strongest champion in Europe of the India-EU FTA.
"I hope and I am reasonably optimistic we can conclude it this year," he added.
Osborne further said Chidambaram has done a huge amount of work to reassure investors.
"Obviously, we would like to see the reforms completed but a democracy is sometimes a messy business as we know in the UK. I'm absolutely behind Mr Chidambaram's efforts," Osborne said before the sixth India-UK Economic and Financial Dialogue at his Treasury office.
He also stressed upon the special relationship between the two countries, highlighted earlier this year during Prime Minister David Cameron's visit to India.
"The dialogue today is about strengthening Britain and India's economic ties and we already have a very good economic relationship with India. Britain is the third-largest investor in India after Mauritius and Singapore. Britain is the home of 50 per cent of all Indian investment in Europe," Osborne said.
The Chancellor said the two countries have a very strong relationship "but we can still make it stronger, creating more jobs in India and the UK".
In reference to the success story of Indian companies in the UK, such as the Tata Group, he added, "I drive around in a Land Rover, which is of course owned by an Indian company. Britain is the most open country in Europe for Indian companies, they can feel at home here".
"We are making it easier to do business and this should carry on being the No 1 destination for Indian companies," he added.
However, Osborne did highlight certain challenges in the path of the strong India-UK relations.
"There are challenges for Britain and India...We don't do enough trade with India and we could do more. And that requires an effort by the British government. Also, we are asking companies to look at Indian markets and think about investing in India," he said.