Muddy policy hurdle faces India-US nuclear deal
07.24.09, 11:05 AM EDT, By Krittivas Mukherjee

NEW DELHI, July 24 (Reuters) - The India-U.S. civilian nuclear deal, already hit by procedural delays, may face a new hurdle: the Japanese partners of top U.S. nuclear firms may need to convince Tokyo and get approval to do business in India.

Analysts say this could mean India and Japan may need to sign a nuclear deal first, adding to the multiple policy and regulation hurdles that have already delayed commercial implementation of the India-U.S. pact.
The Imagindia Institute, a New Delhi-based independent think tank, says it was a 'significant worry' that it may be difficult for U.S. firms Westinghouse and GE to do business in India unless Japan and India entered a nuclear cooperation agreement.

Westinghouse is a subsidiary of Toshiba Corp. ( TOSBF.PK -news - people ), while GE has a strategic partnership withHitachi ( HIT - news - people ) to jointly execute nuclear energy projects worldwide.
'In case such required clearances are not forthcoming from Tokyo, the ability of GE and Westinghouse to engage in India's nuclear business may be severely handicapped,' said Robinder Sachdev, Imagindia's president.

Already, the deal, which could unlock an estimated $27 billion nuclear market in India over the next 15 years, has been bogged down by issues like accident liability protection for U.S. firms and fuel reprocessing technology transfer.

There also seems to be little clarity in India on what the actual policy requirements are.
'It is true that if there is Japanese equity in a U.S. company then the Japanese government can intervene,' said an Indian government official who spoke on condition of anonymity.
'But also the fact is a U.S.-registered company is governed by American laws.'

COMPANIES UNPERTURBED
Westinghouse said Japanese approvals would be needed for nuclear technology or equipment that uses Japanese components.

'The Westinghouse reactor that we plan to supply to India ... does not have any Japanese nuclear technology content and therefore Westinghouse does not need Japanese government approvals,' Meena Mutyala, a Westinghouse vice president, told Reuters.

Danny Roderick, senior vice president for GE's nuclear plant projects, said the company was awaiting U.S. government licences: 'Subsequent technology transfer and export authorisations will be addressed as project planning progresses in the future.'

India and Japan held their third round of strategic talks this month to discuss possible areas of cooperation, including civil nuclear energy, but it was not clear if they addressed the issue regarding American firms with Japanese links.

'Japan will have some say in any transfer or sale of (nuclear) technology, but I think the Americans have got an implicit okay from them,' strategic analyst Bharat Karnad said.
U.S. nuclear firms lag in a competitive scramble with Russian and European firms whose governments guarantee their liability.

They want India to sign a global pact on liability that limits the onus on private nuclear operators and suppliers in case of an accident, and speed domestic legislation on the issue.
But India's divergent politics may mean opposition to any dilution of liability for private firms in the nuclear trade.

The issue is sensitive in India where a gas leak in a Union Carbide factory killed about 3,800 people in 1984, among the world's worst industrial disasters.

Many more have died from gas-related illnesses, and many victims say they still have not been compensated.