Indo-US Nuclear deal: an obsolete agreement

Context:

• Nearly a decade since the memoranda of understanding were inked, the India-U.S. civil nuclear agreement remains obsolete.
• There is no sign yet of any concrete contract between an American company and the Indian authorities to build a reactor.

Background:

• 2004: In January 2004, the United States and India agreed to expand cooperation in three specific areas: civilian nuclear activities, civilian space programs, and high-technology trade.
• 2005: The India-US nuclear deal was initiated in 2005.
• On 18 July, 2005, the then prime minister, Manmohan Singh visited Washington, and in a joint statement with George W Bush, India and the United States agreed to enter into a civil nuclear agreement.
• 2014: In September 2014, Prime Minister Narendra Modi visited Washington and the nuclear deal was once again discussed.
• Discussions were on supplier liability and tracking requirements, which would enable American companies to build nuclear power reactors in India.

What is the Indo-US Nuclear deal?

• Signed in 2005, The 123 Agreementsigned between the United States of America and the Republic of India is known as the S.–India Civil Nuclear Agreement or Indo-US nuclear deal.

Objective:

• As per the deal, India agreed to separate its civilian and military nuclear activity.
• India also agreedopen up the civilian part to inspection by the International Atomic Energy Agency (IAEA).
• In return, the US offered to resume full nuclear trade (selling of reactors, transfer of technology, Uranium sale) with India, ending its nuclear ostracism.

Why the Indo-US Nuclear deal holds significant importance to both India and the U.S.?

The Indo-US nuclear deal holds significant importance to both India and the U.S. The reasons are as follows:

Fissile material:

• The best way to get access to the requisite fissile material for India would be through uranium imports, which was not possible without ending India’s nuclear isolation by US and the Nuclear Suppliers Group (NSG).

Energy security concerns:

• This deal would partially ease India’s energy security concerns.

Growth under the Make in India scheme:

• Access to uninterrupted reliable power would aid in industrial growth under the Make In India scheme and would bring in foreign investment.

Access to better technologies:

• India also gets access to better technologies in the civilian power generation ambit.

Recognizes India as a de-facto nuclear power:

• Strategically, this deal recognizes India as a de-facto nuclear power and has taken Indo-US relations (in all matters including political, economic, military, etc) to the next level (the N deal has turned into a flag-point for Indo-US relations).

India as a possible counter to China:

• The US views India as a possible counter to China in the Asian region and this is good for India.

Nuclear ties will other NSG signatories:

• By getting the Nuclear Suppliers Group (NSG) waiver, India can now look to have nuclear ties will all the other NSG signatories.

Development of a strategic reserve of nuclear fuel:

• The Agreement provides for the development of a strategic reserve of nuclear fuel to guard against any disruption of supply over the lifetime of India’s reactors.

Bringing India closer to Non-Proliferation regime:

• The US wants to bring India closer to the Non-Proliferation regime by placing most of its nuclear capabilities under IAEA safeguards.

Boost India’s economic growth:

• Financially, the U.S. also expects that such a deal could spur India’s economic growth and bring in $150 billion in the next decade for nuclear power plants, of which the U.S. wants a share.

Allow Uranium sale to India:

• It also was under pressure from other nations to allow Uranium sale to India as India is one of the largest buyers of Uranium and everyone wants a share of this market.

Benefit from Indian technology:

• The US may also benefit from Indian technology, especially the Thorium based research, as India had to develop its capabilities in isolation, it may well have developed novel techniques.

Counter to China:

• India can be a useful counter to China in Asia and the US does not want to let go of this opportunity.

What are the reasons for which the Indo-US Nuclear deal is not able achieve its vision?

The reasons for the slow progress rate of Indo-US Nuclear deal are as follows:

No liability of U.S. companies:

• Westinghouse’s new buyers have already pared the business; they will not construct the nuclear power project in India, and will only supply reactors and components.
• In the terrible scenario of a Fukushima-type nuclear accident in India, this further dilutes the liability that U.S. companies would carry.

No support from Donald Trump’s presidency:

• Donald Trump’s presidency has taken a very sharp turn away from renewable energy, and even the promise of nuclear dollars has dimmed.
• India may not get the support that the Obama administration had promised both on financing renewable energy projects and in facilitating India-U.S. civil nuclear power deals.
• India also received a rude shock with the U.S. pulling out of the Paris climate change accord.
• Also, Mr. Trump’s singled out India as a “leading polluter”.

The dynamics of nuclear industry must be studied:

• Shifts in the world nuclear industry must be studied closely before heading back into negotiations with new companies.
• As the pressure to lower nuclear power tariffs increases, nuclear safety requirements have become more stringent, putting intense strain on all those in the business.

Conclusion:

• As a result of all these changes, the India-U.S. civil nuclear agreement for commercial projects is now obsolete.
• To bring back to track, the deal will require a different template that takes into account India and the new global realities.

Some related and basic terminology:

International Atomic Energy Agency (IAEA):

• The International Atomic Energy Agency(IAEA) is an international organization.
• The IAEA was established as an autonomous organisation on 29 July 1957.
• It seeks to promote the peaceful use of nuclear energy, and to inhibit its use for any military purpose, including nuclear weapons.

Nuclear Suppliers Group (NSG):

• Nuclear Suppliers Group(NSG) is a multilateral export control regime and a group of nuclear supplier countries.
• The NSG was founded in response to the Indian nuclear test in May 1974 and first met in November 1975.
• It seeks to prevent nuclear proliferation by controlling the export of materials, equipment and technology that can be used to manufacture nuclear weapons.

Fissile material:

• In nuclear engineering, fissile materialis material capable of sustaining a nuclear fission chain reaction.
• By definition, fissile material can sustain a chain reaction with neutrons of any energy.