Obama in India: Nuclear deal on fast-track

The path-breaking India-US nuclear deal that transformed the two countries from estranged democracies into engaged democracies in the summer of 2005 looks set to inch closer to fruition during the forthcoming visit of US President Barack Obama to India.

With barely days to go before Obama touches down in Delhi on a historic three-day visit on January 25 – the first time an American president will be coming in as the guest of honour at the country’s Republic Day celebrations – senior officials of both sides are locked into intense last-ditch negotiations to resolve festering issues related to India’s civil nuclear liability regime.

Resolving liability impasse

The inter-agency contact group that was set up in September 2014 after the talks between India’s Prime Minister Narendra Modi and President Obama to fast-track the implementation of the nuclear deal has already met twice in New Delhi and Vienna. The contact group is holding another meeting to clinch a deal that could provide greater clarity on the suppliers’ liability in case of nuclear accident and pave the way for the setting up of nuclear reactors by US companies in India. India has already offered sites for two nuclear reactors each to American nuclear power giants GE Hitachi and Westinghouse in Andhra Pradesh and Gujarat respectively, but they are yet to take off due to the US companies’ reservations about India’s civil nuclear regime. The American companies contend that India’s civil nuclear law, in its present form, exposes them to unlimited liability. To break the impasse over differing perceptions of the liability regime, the two sides are exploring a mid-way formula which could involve India setting up a nuclear insurance “pool” to compensate suppliers in case of a nuclear accident. Officials of Westinghouse, the US nuclear giant owned by the Toshiba group, have some reservations about this formula as they feel that it could still saddle them with substantive liability in case of an atomic accident.

New energy and synergy

Technical quibbles aside, what has fuelled optimism about the implementation of the nuclear deal is the new energy and synergy in the India-US relations, which have been epitomised by President Obama accepting Mr Modi’s invitation to visit India within months of the latter’s visit to Washington in September last year. This is the first time two-way visits between the leaders of the two countries have happened within months, signifying a new vibrant phase in the India-US relationship which had drifted and stagnated during the last couple of years of the Manmohan Singh government.

It’s economics, stupid!

The larger context of Obama’s visit also needs underlining: the US economy has bounced back, and the India growth story has got a new shine under a reform-minded prime minister. Enthused by second-generation reforms undertaken by the Modi government, global investors are looking afresh at India as a land of opportunity and US companies clearly will not like to miss emerging opportunities in Asia’s third largest economy. Both IMF and World Bank are now cheerleading for India, and have projected in their latest reports that the Indian growth rate will outpace that of China by 2016-17.

10 years of India-US nuclear deal

In this ambience of renewed optimism, the world’s oldest and largest democracies are expected to raise the bar for their multifarious relationship that straddles diverse areas and encompasses over 30 bilateral dialogue mechanisms. Transforming the economic relationship will be critical to this process of deepening the India-US strategic partnership. 2015 could be another milestone in the journey of the India-US nuclear deal as it marks the 10^th anniversary of the trailblazing deal that was firmed up in the summer of 2005 and brought India back into the global nuclear fold in 2008 with the Nuclear Suppliers Group granting a waiver to India to resume nuclear commerce.

The forthcoming visit is also expected to see President Obama reiterating Washington’s intention to get India as a member into top four global nuclear clubs, including the Nuclear Suppliers Group (NSG), the Missile Technology Control Regime (MTCR), the Wassenaar Arrangement and the Australia Group.

Author Profile

Manish Chand

Manish Chand is Founder-CEO and Editor-in-Chief of India Writes Network (www.indiawrites.org) and India and World, a pioneering magazine focused on international affairs. He is CEO/Director of TGII Media Private Limited, an India-based media, publishing, research and consultancy company.