N-deal prize for US firms? Over $100 billion!

This is called 123 Agreement because this comes under USA's Atomic Power
Act Section 123.
(1) After this Agreement USA will supply all fuel, machinery / equipment
& technology to India for producing Nuclear Power.
(2) All these days from about 22 Nuclear Power Plants, India is
producing power as well as Atom. It's a high security / secret that
from where which is produced, how much is produced, where it is
supplied, what research is being done with that, etc. to anybody. But
if we sign this Agreement, we have to disclose these secrets and also
agree to 14 of our Nuclear Power Plants to be under the scanner of
International Atomic Power Organisation.
(3) The fuel utilised to produce Atomic Power can be recycled for reuse
and this plant will be under direct supervision of IAPO.
If India does nuclear test, this agreement gets cancelled.But
(1) USA will take back all the machinery / equipments / technology
supplied to India thus far.
(2) Those 14 plants will continue to be under scanner irrespective of
the status of the agreement.
On the other hand, if any of the commitments given by USA is breached by
them, then there is no clause for cancelling this agreement.
The agreement is apparently like this... USA can either hug India or
slap India. India will not ask why are we hugged or why are we slapped.
On the other hand, India cannot hug or slap USA for breach of agreement.
This is only capsule so that easy to read and digest.
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Some people don't want India to catch up with China: Chidamabaram

The Finance Minister said China, which draws only two per cent of its energy requirements from the nuclear sources, has mega plans to augment its atomic reactors. By 2020, China wants to build 50,000 MW capacity for nuclear energy and it plans to take it further to 1,20,000-1,60,000 MW by 2030.
(asr: by 2020 India wants to bulild N-capacity of 40,000 MW comparable to China's , see below)

Chidambaram said he wants India to emulate China without envying the neighbouring country. "I have no hesitation in saying that I do not want to envy China...I want to emulate China...I want India to become an economic power and economic super power".

He said a country as large as India should be compared with China. "When we talk about India, we should talk about countries which are as large and as complex as India and that is China...We cannot talk about countries which are smaller than India and poorer than India."


Chidambaram claimed the United Progress Alliance government has only taken the 'dialogue' of the previous National Democratic Alliance government further.

"Do we want to come out of nuclear isolation," the Finance Minister asked the Lok Sabha.


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For the past three years, eager executives from US-based producers of nuclear power plants have been making a beeline for New Delhi, meeting with Indian government officials and coming back to America to lobby for the passage of a controversial nuclear deal between the US and India.

The agreement, first announced in June 2005 but still awaiting approval by Indian lawmakers, would allow India -- which has been subject to sanctions since testing a nuclear weapon 10 years ago -- to buy and sell nuclear technology in the international marketplace in exchange for opening up its civilian reactors for inspections.

The prize for the American companies? More than $100 billion in new reactor construction contracts in just the next 10 years, in a market that has always been closed off to American companies such as GE Energy, USEC and Westinghouse Electric.

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"Everyone knows that this is big," says GE's India CEO, Tejpreet Chopra. "At this point, we're just waiting to see how much capacity the government is willing to add and where."

The deal has been on hold for months, thanks to opposition from members of Prime Minister Manmohan Singh's coalition government. Singh's decision to continue with the deal plunged the country into a parliamentary crisis two weeks ago, as his communist allies withdrew their support, decrying the deal as American imperialism.

The Congress-led coalition faces a confidence vote in Parliament on July 22. If the government survives -- and it's expected to, having replaced the left parties with smaller regional allies -- it will take the deal to the International Atomic Energy Agency in Vienna, which must approve it before the US Congress can vote on it.

Waiting for India to sign the CSC

The delays have taken their toll, though. For the US executives who have been impatiently awaiting the deal's passage, it's becoming clear that when the Indian government finally hands out contracts for up to 30 new nuclear reactors of up to 1,200 megawatts each, US companies might not be at the front of the line.

Instead, French and Russian companies like Areva NP SAS, Atomenergoproekt, and ZAO Atomstroyexport are already taking advantage of their long-standing ties with India's nuclear community, and the fact that India has yet to sign the Convention on Supplementary Compensation (CSC).

That's an international treaty that created a global pool of money to pay victims of nuclear disasters, and since India's not a party to it, any American-built reactors would have to shoulder their own civil liabilities -- a cost that would likely prove prohibitive.


Russian and French state-owned competitors wouldn't have that problem, since those companies could claim sovereign immunity in case of an accident.

"GE may never sell a reactor to India if they don't get the civil-liabilities issues taken care of," says George Perkovich at the Carnegie Endowment for International Peace and the author of India's Nuclear Bomb: The Impact on Global Proliferation.

Companies have had difficulty penetrating India thanks to sanctions that date back a decade. In 1998, India tested a nuclear bomb near the border with Pakistan.

The resulting international trade sanctions, led by the US, starved India's nuclear reactors of uranium and its elite scientific institutes of superfast computers and other equipment that Washington deemed sensitive, or dual-use technology.

The current deal, nicknamed the 123 Agreement, was championed by President George W. Bush and Prime Minister Manmohan Singh as a way to bring theUS and India closer, and also for India to do business with the cliquish club of international nuclear suppliers. India is supposed to open up its 14 civilian reactors to international inspectors, and in return will be allowed to buy and trade nuclear fuel, reactors, and spares with the 45-member Nuclear Suppliers Group. Its military reactors will stay off-limits.

For American companies, this sounded like a blessing. Governments in the US have not approved a nuclear reactor for construction since 1979's Three-Mile Island accident, even though American companies have been involved in about 60 reactors in Japan, South Korea, Finland, and elsewhere.

India's energy needs are vast -- as its economy booms, the country plans to quintuple its nuclear energy production to as much as 40,000 megawatts by 2020. At an estimated $2.5 billion per 1,000 megawatts, the nearly 30 new reactors India will commission could signal the beginning of a "nuclear renaissance" that American nuclear companies have been waiting for, says the US-India Business Council's Ron Sumers.

France, Russia Stand to gain more

First, the deal needs to win approval in India's Parliament, though. India's Congress-led United Progressive Alliance government has had to swap out its communist allies with those from a smaller regional party. And the deal is no sure thing in Washington, either.

The White House is pushing hard to get the deal on the legislative calendar in the House and Senate. For an embattled President, bringing India into the nuclear fold would be a rare foreign policy success for the Bush Administration.

Even if the deal does finally go through, it could be as late as 2009 when India finally gets around to signing the CSC; until it does, no American nuclear company can afford to take the risk of doing business in India.

"That's the kind of protection that companies look for when they decide to invest in countries," said Omer Brown, a Washington-based lawyer who helped push the treaty on behalf of the Contractors International Group on Nuclear Liability.

Meanwhile, both Areva and the Russian companies have leaped to the front of the queue, Atomenergoproekt and Atomstroyexport are already helping India build a nuclear reactor in Kudankulam, in southern India.

France's Areva has been in site-specific negotiations with the state-owned Nuclear Power Corp. of India, says a senior official at the Indian company who declined to be identified because of the political sensitivity of the deal; Areva has exploratory agreements in place that almost assure it of a site in western India.

The prospect of losing more lucrative contracts to the French and Russians has US companies worried. "Signing the CSC would be a way for India to say that they are prepared to play a full role in the international nuclear renaissance," says Dennis Hays, vice-president of governmental affairs at Thorium Power, a specialist in nuclear-fuel design based in McLean, Va., that considers India to be crucial for growth. India has one-third of the world's known thorium deposits.

Large enough playing field for everyone

At the same time, the argument in India goes, why should India commission reactors from American companies that aren't even making sales at home?

"I can easily see the Indians going for French or Russian reactors because they are seen as more advanced," said Padmanabha Chari of the Institute for Peace and Conflict Studies, a Delhi-based think tank. "In the US, the entire industry has stopped growing, and they aren't into the most modern technology."

That's a misconception, say executives from US companies, but it's one they have to fight hard against. Indian officials have tried to assure the companies that the pie is large enough that they will eventually get a decent-sized piece.

"Irrespective of any understanding or quid pro quo, the current situation in India is that the demand for electricity is so large, that we can accommodate all countries," says RB Grover of India's Bhabha Atomic Research Center and India's chief negotiator for the nuclear deal.

There's more than just nuclear reactor business on the line. The deal is seen as a proxy for Indo-American relations, and if it survives, it augurs well for future strategic defense and economic ties. One defense deal delayed until the 123 agreement is signed is the nearly $11 billion purchase of 126 fighters for India's Air Force, a bellwether for US-India military acquisitions. Both Boeing and Lockheed Martin have horses in that race.

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