The prime minister also told Malaysia's New Straits Times in an interview that New Delhi desired speedy reforms of the international financial institutions so that rapidly growing economies like India were properly represented.
Asked if India, once a vocal champion of non-alignment, was tilting to America and the West, the Indian leader replied in the negative.
"We are not tilting in any one direction. The foreign policy of India is an expression of our enlightened national interests. In the globalised world that we live in, the inter-relations and interdependence of nations have increased enormously.
"Therefore, we seek good relations with all major superpowers - the US, Russia, China, Japan. In our continent, ASEAN (Association of Southeast Asian) countries have assumed great importance for the orderly management of increased interdependence with Southeast Asia. We, therefore, look to ASEAN countries to promote trade, investment and multifaceted cooperation."
The prime minister admitted he was not satisfied with the pace of G20's promised economic and financial reform.
"I think the world economy is not really in robust health. There are uncertainties on the horizon. Therefore, on the promise that G20 had held out, I think a lot more remains to be done to realise it," he said.
"I think the reform of the international financial institutions needs to be pushed at a faster pace than ever before. And the coordination of macro-economic policies of various major countries of the world is something that is not moving at the pace one would have liked or anticipated in London or in Pittsburgh or even in Toronto. So, I think there is scope for accelerating the pace of reform."
Manmohan Singh, who is on his second leg of a three-nation Asian tour, spoke glowingly about Malaysian Prime Minister Datuk Seri Najib Razak's January visit to New Delhi.
"It was a landmark visit, and the prime minister said all the right things. He committed himself along with me to work together to nurture and promote multifaceted economic cooperation, and these are things which need to be done.
"Malaysia is one of the most important countries of the ASEAN region. Therefore, whatever we can say or do, I think is not enough. I believe the sky is the limit in working together to promote trade and investment and promote cooperation in multilateral and regional fora."
Although India is growing at near nine percent, the economist-turned-politician said the country had a "long way to go in removing the ills of chronic and mass poverty... but I do feel we are on the right track".
"In the current fiscal, we hope to achieve a growth rate of over 8.5 percent. Overall, the Indian economy has performed well despite the effects of the global economic crisis and the severe drought last year."
But he underlined that India's objective "is not just growth but inclusive growth. To do so, we need to accelerate the growth rate to 9-10 percent on a sustainable basis".
"We are making continual improvements in our policy regime and implementation procedures. Our priority is to focus on agriculture, infrastructure, health and education.
"I would be the last to say that there is no scope for reforms. I think we need to move ahead in reforming our financial system. We need to move ahead to put in place a reformed direct tax system, and also a reformed indirect system which would lay a lot more emphasis on goods and services tax as the major source of revenue from indirect sources."
The prime minister went on to say that Indian companies today were among the most entrepreneurial and competitive globally.
"We have liberalised the FDI (foreign direct investment) regime because we also welcome and need foreign investment, capital, technology and skills for our development plans. We want to ensure a policy framework that is transparent, predictable, simple and reduces regulatory burden."
Manmohan Singh said he wanted to see a comprehensive free trade pact between India and Malaysia and ASEAN.
"We are quite keen to sign a comprehensive free trade arrangement with the ASEAN countries. The goods section is in place. We sincerely hope that all of us have the political will to move ahead with the remaining part of the free trade area in services as well as investments.
"India and Malaysia have successfully concluded negotiations on the text of the India-Malaysia Comprehensive Economic Cooperation Agreement (CECA). Both sides hope to conclude the remaining steps and internal approval processes in the very near future. It is my hope that the agreement will come into force next year.
"I am confident that the bilateral arrangement will qualitatively transform our economic relations and boost trade and investment flows between India and Malaysia...
"We attach high importance to the early conclusion of negotiations on the trade-in-services and investment agreement. Both sides are engaged in intensive negotiations, and we hope that a mutually beneficial and high-quality agreement can be reached soon."
To a query, he said: "Our government is making continuous efforts to improve and streamline the policies and procedures for foreign companies to do business in India. We have taken a number of significant measures to liberalise the investment regime and simplify procedures for foreign companies."
"With the entry into force of the CECA with Malaysia next year, there will be much greater opportunities for the Malaysian business community in the Indian market.
"The sustained growth of the Indian economy and significant new demands in the infrastructure sector present an excellent opportunity for Malaysian companies in the coming years. We welcome investments by Malaysian businesses," he added.
He said that India and China had followed different models of growth best suited to their domestic requirements.
"Our FDI regime in both manufacturing and services is liberal and increasingly oriented to requirements of foreign businesses. We received about $35 billion in FDI in the last financial year and we hope that this figure will grow. According to global agencies, India is one of the three most popular destinations for FDI."
The prime minister agreed that lack of infrastructure was an impediment to growth. "We are fully conscious of this. We have announced a massive spending programme for infrastructure development. I am conscious it cannot be done by government alone because the resources required are huge.
"The strategy for infrastructure development, therefore, involves a combination of public investments supplemented by private investments through the public-private partnership (PPP) route.
"Malaysian companies are already participating in our highway and power projects. We welcome much more participation from Malaysia.
"We will continue to improve the terms and conditions on which PPP projects are awarded to ensure that the process is transparent, bidding is competitive and, at the same time, public interest is adequately safeguarded."India, he added, was committed to resolving all outstanding issues with Pakistan through dialogue.
"I met the prime minister of Pakistan on the sidelines of the SAARC (South Asian Association for Regional Cooperation) Summit in Bhutan in April. Both of us have charged our foreign ministers and foreign secretaries with the responsibility of working out the modalities for restoring trust and confidence in the relationship and paving the way for a substantive dialogue on all issues of mutual concern."