With Donald Trump taking office, optimism grew that the India-U.S. nuclear deal could achieve its full potential.
Background of U.S.-India Civil Nuclear Deal
- Smiling Buddha: In 1974, India conducted its first nuclear test, code-named Smiling Buddha, marking a significant milestone in the country’s defense and technological capabilities.
- The test surprised the United States, raising questions about the source of India’s nuclear fuel.
- In response, the U.S. imposed sanctions on India. Additionally, to prevent the proliferation of nuclear weapons and restrict access to nuclear materials and technology, the U.S. led the formation of the Nuclear Suppliers Group (NSG).
- Operation Shakti: In 1998, India officially became a nuclear state by conducting a series of nuclear tests at Pokhran under the codename Operation Shakti.
- These tests solidified India’s status as a nuclear power. However, the tests drew strong international reactions, particularly from the United States, which imposed economic and technological sanctions on India in response.
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U.S.-India Civil Nuclear Deal
U.S. India Nuclear deal was finalized in 2008, the U.S.-India civil nuclear deal was a major milestone in bilateral relations.
- It required extensive advocacy and collaboration between the Coalition for Partnership with India, the George W. Bush administration, and U.S. Congressional leaders.
- Coalition for Partnership with India: It was a collective of businesses, Indian-Americans, and academics, the Coalition supported the deal amid strong opposition, arguing it would enhance cooperation rather than promote nuclear proliferation.
- The group worked as a key advocate for legislative approval, overcoming significant resistance to establish the deal under U.S. law.
- Contributions: Members of the Coalition, including consultants to the U.S.-India Business Council, acted as liaisons, strategists, and advocates to ensure passage in Congress.
Significance of the U.S.-India Civil Nuclear Deal
- Strategic Partner: The deal marked the end of Cold War estrangement and ushered in a new era of defense and strategic cooperation. It fostered trust through collaboration on nuclear technology, facilitating:
- Defense purchases and manufacturing.
- Military exercises and technology transfers.
- Intelligence sharing and crisis management.
- Economic Benefits : Advocates envisioned large-scale augmentation of India’s civil nuclear sector with U.S. technology, creating jobs and generating clean energy.
- Planned initiatives, like Westinghouse’s proposal to build six nuclear plants, remain unrealized despite announcements in 2016.
- Missed Opportunities: The deal promised economic benefits and a transition to non-greenhouse gas energy sources, reducing reliance on fossil fuels. Delays in implementation have impeded these goals, limiting progress in India’s energy sector.
Challenges Hindering Full Potential of the Deal
- Regulatory Barriers: In 2008, approximately 200 Indian entities were in the U.S. Department of Commerce’s “Entity List,” restricting business with them. Post-deal, most entities were removed from the list; however, some remain due to concerns over technology leakage to military uses or adversaries like Russia.
- Concerns Over Dual-Use Technology: The U.S. emphasizes aligning export control systems to prevent sensitive technologies from reaching unfriendly actors.
- As Jake Sullivan, U.S. National Security Adviser, highlighted, safeguarding dual-use technologies is critical to deeper cooperation.
- Civil Liability for Nuclear Damage Act: It shifted liability from operators to suppliers, deviating from international norms. It was sparked by anti-foreigner rhetoric and the legacy of the Bhopal/Union Carbide disaster.
- Issue of Liability Risk Management: Indian government introduced a 20-year insurance mechanism through state-backed insurers to mitigate supplier liability risks.
- Russian civil nuclear entities, being government-owned, benefit from Sovereign immunity, shielding them from financial liabilities. Direct government backing to handle potential liabilities without jeopardizing operations.
- Saw their involvement as offering geopolitical advantages, motivating participation despite risks.
- Challenges of US companies: U.S. companies, lacking government ownership or similar immunity, view liability risks as prohibitive. The insurance mechanism offered by India has not been sufficient to reassure U.S. suppliers like GE and Westinghouse.
- Cost Overruns: Indian officials are wary of cost overruns in U.S. nuclear projects that burden ratepayers. Lack of significant improvements in energy output or service quality despite high expenses.
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Way Forward
- Technological Competitiveness: U.S. companies must provide state-of-the-art technology to meet India’s evolving civil nuclear needs.
- Affordability Concerns: Technology and equipment must be priced reasonably to avoid raising electricity costs for Indian consumers.
- To secure Indian collaboration, U.S. firms must demonstrate not only technological superiority but also cost efficiency in project implementation.
- Collaborative Approach: The Trump administration can foster collaboration between Indian and U.S. nuclear firms to resolve the challenges of cost overruns, regulatory issues and liability risks collectively.
Conclusion
The time to act is critical, and overcoming these barriers could unlock transformative opportunities for the U.S.-India collaboration in the nuclear energy sector.