Nuclear trade deal will unleash huge investment
Agencies, Published: October 02, 2008, 00:07
New Delhi: India will gain recognition as a nuclear power if the US Senate passes a civil atomic cooperation deal, unleashing billions of dollars of investment and drawing the country closer to the West.
The vote is expected to cap a tortuous negotiation process and, if it goes through, represent something of a triumph for US President George W. Bush and Indian Prime Minister Manmohan Singh.
It will also cap India's gradual rapprochement with the West since the days of socialist self-reliance, a process which began with economic reforms in the 1990s and has gathered pace with the spread of wealth and Western culture ever since.
Trust deficit
"The US-India relationship had a certain trust deficit, but this removes that deficit," said Robinder Sachdev, president of Imagindia, an Indian lobby group. "It brings India closer in terms of its engagement with the West."
Critics say the deal blows a hole in global efforts to contain the spread of nuclear bombs, by allowing India to import nuclear fuel and technology even though it has tested atomic weapons and never signed the Non-Proliferation Treaty. But that argument was brushed aside by the Nuclear Suppliers' Group, under intense US lobbying, in September.
Business opportunities, not only in nuclear trade but also elsewhere in one of the world's biggest and fastest growing emerging markets, also helped overcome any scruples.
"India has got what it wanted on its own terms," said Seema Desai of political risk consultants Eurasia Group in London. "That is a sign of India's rise."
The deal could open up around $27 billion (Dh99 billion) in investment in 18-20 nuclear plants over the next 15 years, according to the Confederation of Indian Industry, with companies from the US, Russia, France and India all expected to benefit.
By 2030, the overall economic benefits that will accrue to India's economy could touch $500 billion (Dh1.835 trillion), says Imagindia.
But the deal will not solve India's energy deficit. Nuclear power could double its share in India's electricity supply but is unlikely to surpass 7 per cent in the next two decades, analysts say.
Singh had to overcome fierce opposition from his own communist allies and a nail-biting no-confidence vote to get the deal through India's parliament in July.
Facts of the deal
What is the pact?
Overturning a 34-year-old ban, it allows India access to US civil nuclear fuel and technology although it has never signed the Non-Proliferation Treaty (NPT), conducted nuclear tests in 1974 and 1998, and has not ruled out doing more.
Under the amendment, India must separate its civil and military nuclear facilities, and submit civil facilities to inspections by the International Atomic Energy Agency.
The agreement means other countries can sell India nuclear technology and fuel. France signed such a deal this week.
Why is it controversial?
Critics say it undermines the NPT, membership of which has long been the guideline for the 45-nation Nuclear Suppliers Group (NSG) export cartel to provide civilian nuclear assistance.
Critics also say it undercuts Washington's efforts to curtail Iran's nuclear programme and opens the way for a potential arms race in South Asia between India and Pakistan.
India says 14 of its 22 nuclear facilities are civilian. The pact could make bomb-making easier at the other eight, as civilian nuclear fuel needs will be met by the United States.
Who will benefit?
US and European companies that supply nuclear technology and help build reactors.
India. It becomes a de facto nuclear power. New Delhi even says it still can test nuclear weapons if it needs to, although a waiver of NSG rules adopted to allow trade with India indicates this would be cut off if India tested again.
Washington. The deal will mean deeper ties between Washington and Delhi just as India starts to embrace the West. It is not just about friendship - the US, for example, may now have a better chance of winning a $10 billion (Dh36.7 billion) fighter deal from India, the world's biggest arms contract.
Who will not benefit?
Pakistan, India's nuclear rival, has sought a similar deal with Washington but was refused because of a poor non-proliferation record. As a result, Islamabad has talked of expanding nuclear cooperation with China. Pakistan has not signed the NPT.
China. Some analysts see the India deal as part of attempts by the United States to counterbalance China's influence in Asia.
Is the deal popular in India?
Polls show most Indians are far more worried about the economy and inflation than some abstract nuclear deal.
The powerful communists withdrew their support for the Congress-led government over the deal, saying it made India a pawn of Washington. Nationalists also oppose the deal, saying it limits India's ability to test nuclear weapons.
