The high level talks are expected to explore new frontiers and initiatives to further promote bilateral relations ahead of Modi's much-awaited visit to the US.
Here are key issues which could be discussed in the meeting
Expanding bilateral trade and the WTO issue:
This issue could be atop of the bilateral meeting on Thursday. Kerry is likely to press New Delhi to drop its opposition to global trade reforms (WTO deal). On Wednesday, Kerry had said that the WTO deal is a test of India's commitment to advance economic liberalisation.
India has refused to sign a key global trade agreement and has threatened to block a worldwide reform of customs rules. India puts that it will be ready for signing the deal if it is accompanied by a parallel agreement allowing developing countries more freedom to subsidise and stockpile food grains.
Meanwhile, US says India is being unreasonably raising objection to the agreement as its stepping out could mean the reforms being stalled for everyone. "We are very disappointed that India has taken a step back from its agreements that it made in December (last) at the WTO," US secretary of commerce Penny Pritzker said.
Besides the TFA and WTO, India's intellectual property rights regime and the issue of a long-pending bilateral investment treaty could be discussed.
NSA snooping issue
Another issue that could come up in the meeting are the allegations that the US National Security Agency snooped on targets in India, including BJP when it was in Opposition.
India lodged its protest and sought details from the top US diplomat in New Delhi after the news came to light. The allegations has created tension and India is expected to raise this issue on the table.
Kerry is likely to press New Delhi to drop its opposition to WTO deal
"There is considerable disquiet in the country on this issue and leaders do reflect public concerns. These issues are going to figure," said Syed Akbaruddin, spokesperson for Ministry of External Affairs.
Visa and other issues relating to Indian companies
The US which is asking India to open up trade and opportunities for business, has never been supportive when it comes to granting visas to Indian IT professionals. The US has even imposed restrictions on offshoring IT projects by Government departments.
The proposed US immigration reforms, aimed at discouraging dependency on skilled non-immigrant workers to safeguard American jobs, can weaken the mutually beneficial partnership between India's $118 billion IT services industry and its clients in the US, according to a study by a Delhi-based economic think-tank.
A study by JP Morgan (June 2013) suggests that the Bill, if passed in its current form, would cause a direct loss of $2.6 billion to India's IT sector and about $6 billion, or 0.4 per cent of India's GDP, in indirect losses in terms of possible job losses and loss to business in IT-related services.
Sharing terror intelligence
Both the oldest and largest democracies of the world are victim of terrorism. India can help US its policy on terrorism. They can share vital information and thereby analyze the threat of terrorism. Nuclear policy is another issue where both the countries can have a dialogue by investigating a wide range of nuclear issues.
Stepping up defence purchases
The two sides are in consultation to upgrade their ties by simplifying technology transfer policies and exploring possibilities of co-development and co-production of defence systems to invest the relationship with strategic value. India has procured military equipment worth around Rs 60,000 crore from the US since 2003 and deals worth over Rs 30,000 crore for procuring Apache attack helicopters, Chinook heavylift helicopters, P-8I anti-submarine warfare and surveillance aircraft are in the pipeline.
The defence trade has shown significant growth in recent years with aggregate worth of defence acquisition from the US crossing over USD 10 billion. While major initiatives in defence field are likely to be discussed during US Defence Secretary Chuck Hagel's visit next month, tomorrow's dialogue will set the tone for the same.
The two sides are also expected to hold discussions on further expanding military-to-military exercises between the two sides.
While the ambitious civil nuclear cooperation agreement is stuck with American companies apprehensive of Indian liability law, the trade ties have also not shown impressive growth. Total bilateral trade in goods touched $63.7 billion in 2013, registering a mere growth of 1.7% over the last year.