India’s nuclear isolation came to an end with the help of civilian nuclear deals with the United States and its allies. Yet Russia has more influence on the Indian nuclear power market. The war in Ukraine and the wave of Western sanctions on Russian exports raises concerns about India’s position. If India makes the unlikely decision of following the West to aggressively condemn Russia, India’s civilian nuclear energy, a crucial piece of the country’s strategy for energy security and clean energy transition, may also suffer.
Accordingly, these dynamics require a reexamination of not only India’s civilian nuclear cooperation, but also the role of the United States in facilitating nuclear energy in India to reduce the latter’s dependence on Russia.
A Brief History of India-US Nuclear Cooperation
The United States financed India’s first nuclear power plant and trained Indian nuclear scientists under its “Atoms for Peace” Cold War program in the 1960s. However, India refused to sign the Nuclear Non-Proliferation Treaty in 1968, citing the treaty’s division between nuclear “haves” and “have nots,” and it detonated its first nuclear in 1974. In response, the United States imposed sanctions on the explosion country and led the creation (without India) of the Nuclear Suppliers’ Group (NSG), a group of countries that regulate their nuclear exports to prevent diversion of nuclear materials to weapon’s use.
This started nearly three decades of India being viewed as international nuclear pariah. In 1998, India conducted further nuclear tests, attracting more US sanctions.
The United States soon realized the potential of India as a strategic partner. However, nuclear proliferation concerns a sticking point in the bilateral relationship. Through 2003 and 2004, a strategic dialogue between the two developed, which paved the way for the 2008 India-US civilian nuclear deal. No agreement was more consequential for India’s nuclear program and India-US ties. The deal ended India’s pariah status by normalizing its nuclear program, and ushered in a blossoming of India-US ties beyond nuclear energy that now spans clean energy, climate, health, defense, and space, among others. The agreement largely followed the template of “123 Agreements” used by the United States for bilateral civilian nuclear deals it strikes with other countries.
The United States also pleaded India’s case to the NSG to grant India a waiver in order to facilitate India’s entry into global civil nuclear trade. According, India forged similar agreements with NSG members Japan, France, and the United Kingdom.
However, a significant bottleneck to the full potential of the India-US civilian nuclear deal has been India’s liability regime for nuclear accidents. While India is party to international nuclear liability regimes, a 2010 Indian law passed a section that would hold suppliers of nuclear technology (eg US exporters to India) liable for any accidents. This came about after domestic pressure to hold foreign industrial suppliers to account after the Bhopal gas tragedy in the 1980s.
The law became a barrier for foreign nuclear suppliers in India. Although India and the United State reached an agreement in 2015 to move past the liability bottleneck by using a nuclear insurance pool, even after seven years, commercial contract negotiations are still ongoing between US suppliers and the nuclear operators in India.
How Russia Was Able to Dominate the Indian Market
Nuclear cooperation between India and Russia can also be traced back to the 1960s. Like the United States, during that decade Moscow extended scientific and technical nuclear assistance to India. However after the 1974 nuclear tests, the US and Soviet responses diverged sharply. The Soviet Union agreed to supply heavy water to India for Canadian-built reactors, and throughout the 1980s and 1990s Moscow remained crucial for the survival of India’s nuclear program by supplying fuel during the country’s global nuclear isolation. Likewise, India struck deals with the Soviet Union and then Russia to build two gigawatt pressed light water reactors. By 2018, Russia has agreed to supply six more reactors to India.
Russian exports dominate the global export market for civilian nuclear energy. Despite the United States normalizing India’s civilian nuclear program, Russia has been the biggest benefactor of the market for foreign nuclear suppliers in India. This is in part due to a combination of aforementioned historical ties, aggressive marketing of exports through Rosatom, Russia’s vertically integrated nuclear state enterprise, and striking deals to work through India’s nuclear liability bottleneck. Globally Russia provides package deals (fuel, technology, and waste) for its nuclear exports at attractive financial terms, versus the “a la carte” approach taken by US suppliers. Moreover, in 2014, through additional liability insurance policies in its contract, Russia was able to proceed with its planned exports to India despite the Indian civil nuclear liability law.
Russia was not the only country to figure out the liability impasse: France also struck a deal in 2022 for reactors in India. These commercial contracts by other countries underscore that the United States has fallen behind in exporting technology to meet Indian demand. According, the United States can learn from the experience of Russia and France to move negotiations between US suppliers and India forward. If the United States is ambitious about exporting its nuclear technology, it can also streamline its nuclear export control regulations. This complements longer-term recommended measures to bolster US nuclear exports to India and globally.
Strengthening India-US Nuclear cooperation
Beyond the liability impasse, another key factor for strengthening India-US ties is facilitating India’s vision of exporting its indigenously developed pressurized heavy water reactors (PHWRs) abroad. Currently, NSG rules prohibit India from being able to fulfill this vision, and India’s prospects for joining the NSG in near future look remote, thanks to China’s persistent obstruction.
However, a framework similar to the India-Russia-Bangladesh agreement, where India and Russia both supported new reactors in Bangladesh, with prominent US participation in the development of PHWRs may facilitate export of these Indian reactors. There certainly might be complications while executing such a framework, but such cooperation could reduce India’s dependence on Russia. Russia dominates global uranium enrichment, and PHWRs eliminate the need for costly enrichment.
The war in Ukraine has exposed some obstacles to the further convergence of US and Indian interests. While ties are strong, there are differences in how to respond to Russian aggression. Given the significance of the India-US nuclear deal, the geopolitical importance of civilian nuclear energy to both the United States and India, and the United States’ ceding ground to Russian civilian nuclear exports, it is time to take advantage of the framework offered by the nuclear deal and put it into further action. Further civilian nuclear cooperation between the United States and India could reduce the latter’s dependence on Russia, and can help the United States achieve a broader coalition of partners to condemn Russia.