The new framework will enhance bilateral defence partnership by stepping up joint military exercises and through more in-depth intelligence-sharing, maritime security efforts among others.
"Today, we have also decided to take our growing defence cooperation to a new level. We have agreed, in principle, to pursue co-development and co-production of specific advanced defence projects," Prime Minister Narendra Modi said after holding extensive talks with visiting US President Barack Obama here.
Modi said this will help upgrade country's domestic defence industry and expand the manufacturing sector in India.
He added that both countries will also explore cooperation in other areas of advanced defence technologies.
The Prime Minister did not specify what these projects were.
"We have renewed our Defence Framework Agreement. We will deepen our cooperation on maritime security," he said in a joint media interaction.
Obama, who arrived today on a three-day visit, welcomed the renewal of the pact and said it will guide the bilateral defence cooperation for next ten years.
"We agreed to deepen our defence and security cooperation.... And in a major step forward for our relationship, defence technology and trade initiative will allow us to jointly develop and produce defence technologies," he said.
Obama added that both Modi and he have also agreed to a "new vision for Asia Pacific".
"We are doing together more to advance our shared security and prosperity in this critical region," he said.
The first framework agreement, which expires this year, was signed in the US in 2005 by the then Defence Minister Pranab Mukherjee and his US counterpart in the previous George W.Bush administration, Donald Rumsfeld.