President George W Bush says he looks forward to working with Prime Minister Manmohan Singh, whom he is scheduled to meet later this month on the margins of the United Nations General Assembly in New York.

In an exclusive interview with Aziz Haniffa, national affairs editor of India Abroad – the newspaper owned in the United States by rediff.com – his first with a South Asian newspaper, the president said he sees India playing "an important role in consolidating democracy and peace in South Asia and the rest of the world".

The last of a three-part interview:

Part I: 'I am committed to an enhanced relationship with India'
Part II: 'We are not a mediator in Kashmir'

Designating Pakistan a Major Non-NATO Ally, which essentially means that Pakistan can receive sophisticated weapons and enter into a defence and security partnership with the United States — won't this increase instability in South Asia and lead to an arms race as the Indians argue?

Absolutely not. Our position on stability on the subcontinent has been clear, and it would be wrong to assume that designation of Pakistan as a Major Non-NATO Ally automatically means that there will be an infusion of sophisticated weapons into Pakistan.

Mr President, as you know, India was the first country to unequivocally declare its support for the US global war against terrorism following 9/11, and has been in the forefront of this war on global terrorism. However, India continues to be very disappointed in what it sees as a "double standard" by the US in what it believes is your administration's pandering to Pakistan despite what India says is Pakistan's fomenting of cross-border terrorism in India, particularly Jammu and Kashmir.

India has been deeply disappointed that the US has not been able to get Pakistan to permanently halt this cross-border terrorism, which although now significantly reduced, still continues. How do you assuage India's hurt feelings and concerns on this score, and also on what India sees as lukewarm pressure on President Musharraf by your administration to return Pakistan to democratic and civilian rule?

India and Pakistan are major allies in the global war on terror based on the very different positions they find themselves in. Pakistan has a very important role to play in the global war on terror under very difficult circumstances, and Pakistan has made and continues to make indispensable contributions to the fight against Al Qaeda and other terrorist organisations. India too has played a significant and important role in the war on terrorism. As you have noted, the situation on infiltration has improved, and we expect it to continue to improve.

Pakistani success in the war on Al Qaeda and other Islamic terrorist organisations is in India's interest. Defeat of these groups will enhance security for the whole region and world.

Coming to domestic issues, the role of the Indian-American community, and the contributions they have made in all areas from medicine to education and from high technology to business, etc, which you have acknowledged and praised on several occasions. If re-elected, would you appoint Indian Americans to senior positions in your administration? Maybe even a Cabinet or sub-Cabinet-level position and not simply token appointments on various boards and commissions? As you know, they not only have the qualifications, but impeccable credentials and all of the wherewithal to serve in senior-level jobs.

I plan to continue to name the very best people to senior positions, regardless of race, religion, or national origin, as I always have. I am proud of my administration's record in naming Indian Americans to high-level positions. No administration has a better record than we do, and we are proud to be the first administration to recognise Diwali, the Festival of Lights, in the White House. My White House Office of Faith-Based and Community Initiatives was fortunate to have an Indian American as its White House Fellow, and he offered a Hindi prayer at one of our conferences. And I'm very pleased that we may have our very first Indian-American member of Congress in Bobby Jindal, whom I previously appointed as an assistant secretary of health and human services.

But this represents something important -- that Indian Americans have taken their place in the American mainstream and made themselves part of the fabric of this country through their hard work, their patriotism, and their contributions.

One issue that has evoked much controversy in recent months, although the rhetoric has eased somewhat now, with the improving economy, is the outsourcing issue, with India virtually serving as the back office of the US. Several bills have been introduced in Congress to curb or restrict outsourcing and also restrict or eliminate the H-1B visa category and the L-1 visa programme that has for decades brought highly skilled professionals, especially from India, to this country.

What are your views on outsourcing? Do you believe that what some of these lawmakers are proposing is totally contrary to the free-market and free-trade views that the US continues to espouse?

The right way for America to respond to the challenges of our growing and changing economy is not a retreat to economic isolationism, but a pro-growth economic agenda, a strong education system, and a helping hand for American workers to gain the skills to secure good jobs. I know that economic changes can cause painful dislocations for some workers and their families, and I am committed to help ease these transitions and assist workers in preparing for the global economy and the jobs of the future.

Global trade is vital to the success of our economy and job creation. We need to continue to expand trade and work to open markets for American goods and services. Millions of high-paying American jobs depend on trade. American farmers who plant one in three acres for export depend on trade. And foreign-owned firms in the United States employ over six million Americans.

Finally, even though you have been not once but twice to the Islamic Centre after 9/11 and have also met Arab, Muslim, and Sikh groups, the paranoia and xenophobia after 9/11 continues and several South Asians, including Indians in the US, have been subjected to hate crimes and racial profiling, and some argue that the Patriot Act and the Patriot Act II that you keep pushing for have exacerbated the situation.

Are you, and your administration, committed to absolutely and unequivocally not tolerating such racial profiling and hate crimes and how do you intend to stop this rising incidence of attacks?

I have made it absolutely clear that we are waging a war against terror and not against any group or religion. I am proud of the fact that communities across the country have rallied to the support of people – their friends and neighbours – who have been victims of prejudice, ignorance, and fear since the 9/11 attacks. This is the real spirit of the American people and the spirit that guides my administration. We have a responsibility to protect all the American people against attack, but we will not discard our values of justice, tolerance, and respect for the dignity of the individual in the process. My Office of Faith-Based and Community Initiatives has reached out to all faiths, including Hindu, Buddhist, Muslim, and other faith-based organisations representing minority faiths in America.

Photograph: Rusty Russell/Getty Images | Image: Uday Kuckian