IN PERSPECTIVE Gains for both US and India

Indian technology, energy and economy will benefit as sanctions wind down. 

The Indo-US nuclear deal, signed in July 2005 at Washington D C, has been criticised on many grounds in India, the US and in other countries. However, the two governments appear to think it is a mutually beneficial deal and are continuing negotiations on the ‘123’ agreement consequent to the Hyde Act allowing the US administration to make an exception for India in nuclear trade and technology cooperation. 

India has been under international sanctions and subjected to technology denial regimes hampering research and development (R&D) in nuclear energy, defence, space and industry since May 1974. Sanctions were tightened after India declared itself a state with nuclear weapons in May 1998. These are being eased and will be completely lifted. 

While Indian science and R&D have spectacular achievements to their credit despite international sanctions and technology denial, India is still a developing country. India’s GDP is growing at a rate of about eight per cent per annum with a recent Goldman Sachs report predicting that India will overtake the US as the world’s second largest economy by about 2040. In order to sustain this economic growth, India’s energy supplies must increase at an average rate of six per cent per annum. The demand for power is likely to grow from 130 GW at present to 1,300 GW by 2050. 

India imports more than 70 per cent of its crude oil needs. Our sizeable coal reserves are of low quality and excessive reliance on coal and oil for energy contributes to global warming. The potential of India’s hydro power is unexploited but limited while solar power and wind energy are being exploited but cost-effective technologies for these have not been developed. 

At 3,500 MW or 3.50 GW per annum, nuclear energy contributes only three per cent to India’s energy basket. India’s goal for 2000 was to achieve nuclear power capacity of 10,000 MW but India has neither modern cost-effective nuclear technology nor sufficient uranium reserves to do this. Modern nuclear reactors average 1,000 MW of power while Indian reactors average 220 MW. India could increase its nuclear power capacity to 300 GW by 2050 but even this would require external supplies of nuclear fuel. India needs both nuclear fuel supplies and nuclear reactor technology to enhance its capacity for generating power. Hence, the Indo-US deal will open India’s market for nuclear trade and by increasing the share of nuclear energy in India’s energy basket, it will help to reduce global warming. 

India will also benefit when technology denial regimes are wound down. It will be able to get state-of-the-art weapons and C4ISR technology. Indian companies will be able to enter into cutting-edge R&D projects, such as those in ballistic missile defence, with the world’s leading defence contractors. The ISRO will benefit from commercially-available space technologies. Under the sanctions, India was forbidden to purchase supercomputers for weather forecasting but will be able to do so once sanctions are fully lifted. India will benefit in medical diagnostics and inertial navigation equipment as these employ dual-use technologies. Indian scientists will be able to participate in international conferences for which they were denied visas. Many benefits will be indirect and contribute substantially to India’s growth. 

There have been gains for the US too. When he signed the “Henry Hyde United States-India Peaceful Atomic Energy Cooperation Act” on December 18, 2006, President Bush said the deal would strengthen India-US cooperation on energy; promote economic growth and open up an important market for US businesses “by paving the way for investment in India’s civilian nuclear industry for the first time ever”; enable India to reduce greenhouse gas emissions and improve its environment; and keep the US safe by paving the way for India to join the global effort against the spread of nuclear weapons. 

Stephen Cohen, a South Asia specialist, says the deal gives the US an opportunity to work with India to prevent a broader nuclear arms race which is “certainly not in the interest of India, Pakistan, China, or America.” The nuke deal is a win-win deal for both countries and the international community. 

(The writer is Senior Fellow, Centre for Air Power Studies, New Delhi.)