India and the US on Friday inched closer to concluding an agreement to operationalise the civilian nuclear deal but some work still needed to be done after the second day of high-level talks.

Foreign Secretary Shivshankar Menon and US Undersecretary of State Nicholas Burns held detailed discussions on the proposed 123 Agreement with an aim of sorting out differences on various aspects, particularly the reprocessing right.

The two sides also held marathon technical-level talks focusing on the nitty-gritty that would govern the agreement, like fuel supplies, sources said.

"The talks were positive," a source said, adding there was forward movement in the negotiations.

"But there is still some work to be done," the source said. The talks will continue tomorrow.

Both sides are keen to conclude the agreement as early as possible.

Burns also discussed the issue with External Affairs Minister Pranab Mukherjee, National Security Adviser M K Narayanan and Minister of State for External Affairs Anand Sharma.

Earlier in the day, the US Undersecretary said both sides are working hard to conclude the deal and hoped it could be clinched as soon as possible.

Burns told reporters he had "good discussions" with Menon and special envoy on the nuclear issue Shyam Saran.

"I think we are working hard. We are working well and let's hope it will be as soon as possible," Burns said.

The two countries are aiming at sorting out differences, particularly on issues like reprocessing right, perpetuity of fuel supplies and continuance of the civil nuclear cooperation if India were to conduct an atomic test.

India has been insisting on having the right to reprocess spent nuclear fuel and is not ready to accept any legally binding clause in the agreement that could cap its strategic nuclear programme.

"Both of us (India and the US) understand how important this agreement is to our relationship", Burns said, adding, "It is without any question in the best interests of both the countries."

India's High Commissioner to Singapore S Jaishankar, who was closely involved in the talks prior to his present assignment, is also participating in the discussions, mainly on the technical aspects.

Richard Stratford, Director in US State Department's nuclear division, is also part of negotiations.