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Growing Prospects for Sales of Civilian Nuclear Technology to India

Recent agreements signed by India and the United States, along with subsequent enabling legislation, are paving the way for the eventual sales of civil nuclear power technology to India.

by Justin Rathke

The fast-growing Indian economy is in great need of energy to power its electric grid. Experts estimate that India’s civil nuclear energy sector will need at least $100 billion worth of investment during the next 20 years. U.S. companies hope to capture as large of a share of that investment as possible. Private studies suggest that if U.S. vendors win just two civil nuclear reactor contracts, they would create 3,000–5,000 new direct jobs and 10,000–15,000 indirect jobs in the United States.

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Members of the U.S. nuclear technology delegation visit with Indian officials at the National Thermal Power Corporation in New Delhi on December 4, 2006, during the business development mission organized by the U.S. Department of Commerce's International Trade Administration. (U.S. Department of Commerce photo)

Members of the U.S. nuclear technology delegation visit with Indian officials at the National Thermal Power Corporation in New Delhi on December 4, 2006, during the business development mission organized by the U.S. Department of Commerce’s International Trade Administration. (U.S. Department of Commerce photo)

To tap this market, the Commerce Department’s Office of Energy and Environmental Industries took a delegation of representatives from the U.S. civil nuclear energy industry on a trade mission to India from November 28 to December 5, 2006, as part of the business development mission led by Under Secretary for International Trade Franklin L. Lavin. (See article in January 2007 issue of International Trade Update.)

Change in U.S. Policy

American nuclear suppliers are knocking on the door of the Indian market just as U.S. law is changing to allow U.S.–India civil nuclear trade. On December 9, 2006, the House and Senate passed legislation to exempt the United States from certain requirements of the Atomic Energy Act of 1954, moving the two countries one step closer to peaceful civil nuclear cooperation. The bill was signed into law on December 18, 2006. “The United States and India are natural partners,” said President George W. Bush during the signing ceremony. “The rivalries that once kept our nations apart are no more, and today America and India are united by deeply held values.”

Additional Steps Necessary

For American companies to sell nuclear technology to the Indian market, the United States and India must sign a bilateral “123 Agreement,” which will dictate the terms of their cooperation. India must also take a number of steps to bolster non-proliferation, including signing a safeguards agreement with the International Atomic Energy Agency (IAEA) . Then the Nuclear Suppliers Group (NSG) must grant an exception for all its members to be permitted to sell to India. Last, President Bush must make several determinations as outlined in the new law. Some of those determinations require additional progress by India in meeting its joint statement commitments, such as adhering unilaterally to the NSG and Missile Technology Control Regime and making substantial progress toward concluding an additional protocol with the IAEA.

Liability Issues Remain

For the private sector to feasibly participate in India’s nuclear program, the country must amend its laws and adopt adequate liability coverage to minimize risk to private companies in the unlikely event of a nuclear accident. "Currently, India does not have a nuclear liability law covering its facilities,” observed Omer Brown, a member of the U.S. trade delegation, “[C]oncerns over nuclear liability would be a major impediment to any nuclear trade with India."

The mission gave representatives from the Commerce Department and the U.S. companies the opportunity to press India on making progress in areas of concern, such as the liability issue, and to learn from high-level policy-makers about plans for developing India’s nuclear power sector. The United States has not been involved in India’s nuclear energy program since the General Electric Company sold two boiling water reactors to install at the Tarapur Atomic Power Plant in the 1960s.

Next Steps

The Commerce Department is considering a follow-up mission that would feature a multicity vendor conference, where U.S. civil nuclear firms can build relationships with potential Indian partner companies. The U.S.–India Business Council is also planning a number of initiatives to further commercial nuclear cooperation, including leading a delegation to India in March 2007.

Capturing market share abroad, especially in large countries such as India, will help U.S. nuclear suppliers lead what could be a domestic renaissance in nuclear power. The Energy Policy Act of 2005 included a number of incentives designed to promote nuclear power to lessen U.S. dependence on imported fossil fuels and to promote clean energy that does not produce greenhouse gas emissions.

Justin Rathke is an international trade specialist with the Manufacturing and Services unit of the International Trade Administration.