Indian-U.S. Nuclear Trade Still Faces Hurdles

Daniel Horner

More than a year after the Indian-U.S. nuclear cooperation agreement entered into force, multiple obstacles remain before U.S. companies can receive licenses for nuclear exports to India, documents and interviews indicate.

The countries have not yet agreed on a pact on Indian reprocessing of U.S.-origin material or worked out the arrangements for nuclear technology transfers from the United States to India. Nor has the Indian parliament approved nuclear liability legislation. Those issues have been publicly aired for months. (See ACT, October 2009.)

Another issue relates to a provision in a 2008 U.S. law dealing with the nuclear facilities that India opens to International Atomic Energy Agency (IAEA) inspections. The U.S. Nuclear Regulatory Commission (NRC) cannot issue licenses for nuclear trade with India until India meets the requirements of that provision. In a Jan. 8 e-mail to Arms Control Today, the Department of State said it had not yet determined that India met the requirements.

Placing some of its reactors under IAEA safeguards was a key part of a deal between India and the United States to ease U.S. and international nuclear trade restrictions on India, which is not a party to the nuclear Nonproliferation Treaty and conducted nuclear test explosions in 1974 and 1998.

In separate actions in 2008, the Nuclear Suppliers Group, which has more than 40 member countries, and the U.S. Congress lifted restrictions that had been in place for three decades on nuclear trade with India. (See ACT, October 2008).

Currently, the only Indian reactors under safeguards are those that were or are being built with foreign assistance: two units apiece at Tarapur, Rajasthan, and Kudankulam.

As part of the nuclear deal, originally announced in a joint statement during Prime Minister Manmohan Singh’s visit to the United States in July 2005 and further elaborated in later statements, India was to place under safeguards 14 of the 22 power reactors that were in operation or under construction. That meant declaring eight reactors in addition to the six that were already under safeguards.

In a document submitted to parliament on May 11, 2006, the Indian government listed 14 reactors, in chronological order of when they would be “offered for safeguards.” The first six on the list are the ones already under safeguards.

The document is known as the “separation plan” because one of India’s commitments under the deal with the United States was to separate its military reactors from civilian ones and place the latter under safeguards. In addition to the reactors, the document lists a number of fuel cycle facilities to be placed under safeguards. The list includes six “upstream facilities,” which are facilities, such as fuel fabrication plants, that are part of the front end of the nuclear fuel cycle.

In submittals to the IAEA last October, India listed eight reactors—the six already under safeguards, plus two more units at Rajasthan—and the six upstream facilities. A Nov. 12 IAEA document summarizes the submittals.

Under the 2008 law, which approved the Indian-U.S. cooperation agreement that the Bush administration had negotiated, the NRC cannot issue the necessary licenses until India has given the IAEA a list of facilities that is “not materially inconsistent with” the separation plan.

In the Jan. 8 e-mail, the State Department said that “the NRC cannot currently issue licenses related to the US-India [nuclear cooperation] agreement. The matter is still pending.” The agreement entered into force in December 2008.

An Indian official said his government would offer facilities for safeguards in accordance with the separation plan and India’s safeguards agreement with the IAEA. The separation plans says India will declare the 14 reactors by 2014.

The question of the criteria for issuance of NRC licenses is a matter for the U.S. government and Congress to decide, the official said in a Jan. 12 interview.

Other Obstacles

India has said there will be no contracts with U.S. companies until the two countries have concluded the reprocessing agreement. Last November, there was a wave of expectation in some quarters that the agreement would be signed during Singh’s visit to the United States that month. Right after the visit, Indian officials publicly said they expected a signing in another week or two.

In a Jan. 6 interview, a former U.S. official said the differences between the two sides were down to “two or three items” and were “nothing fundamental.” It is a question of “finding formulations that both sides’ lawyers can live with” rather than “big philosophical questions,” he said.

The discussions over the technology transfers relate to the “nuclear export accountability program” laid out in the 2006 U.S. law known as the Hyde Act, which opened the door to U.S. nuclear trade with India but set a number of nonproliferation conditions. The provision on technology transfers requires more detailed reporting on them than U.S. law generally requires. (See ACT, September 2009.)

Although not mandated by U.S. law, nuclear liability legislation is important to U.S. companies that are in the running to build Indian reactors, the biggest potential prize in the Indian nuclear market. Such legislation would cap the companies’ liability if an accident occurred at one of their plants. The former U.S. official said the liability legislation could be introduced in the Indian parliament in the next two or three months.

At this point, none of the various obstacles are holding up business, he said. Although some accounts have suggested that contracts are imminent, he said he “wouldn’t take that at face value.”