Indo-US civilian nuclear deal
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INDIA'S ENERGY SECURITY WITH SPECIALREFERENCE TO INDO-US NUCLEAR DEAL
“Consider the past 400 years of history. The world developed a new source of power, steam, and the industrial age came in. India with all her many virtues did not develop that source of power and it became a backward and a slave country. Now, we are on the verge of the atomic age. If we are to remain abreast in the world as a nation which keeps ahead of things, we must develop this atomic energy quite apart from war…of course, if we are compelled as a nation to use it for other purposes, no pious sentiments of any one of us can stop the nation from using it that way.”
- Jawaharlal Nehru, 06 April 1948
CHAPTER - I
INTRODUCTION AND METHODOLOGY
The energy security encompasses the oil & natural gas, fuel and electricity. However in the backdrop of Indo-US civilian nuclear deal we are referring to the electrical energy security generated from nuclear sources. The India's nuclear reactors are fueled by uranium. India's uranium is low grade and quantity and is about seven times costlier than what's available in the world market. The Indo - US civilian nuclear deal encompasses the transfer of sensitive technology for reprocessing, enrichment of fuel and importing uranium for generation of electricity from nuclear energy. In recent years, if there is one issue that has been on the headlines at regular intervals besides terrorist attacks in different parts of our country, is the Indo-US civilian nuclear deal. So much so that it was on the verge of bringing down the world's largest democracy. Never before in the history of independent India where any subject thought about, deliberated, argued and counter argued by the political, bureaucratic and the scientific elites. The main advantage of this deal is that the India not only got the assurance from the world to increase its electricity generating capacity but India can continue its nuclear weapon programme unhindered. The deal also gave strategic advantages to US.
Statement of Problem
2. This paper aims to analyse “Will India be able to fulfill its power demand by 2030 by generating electricity from nuclear power plants in light of Indo-US civilian nuclear deal.”
3. The extent of India's strategic interest has expanded and span from the Gulf of Hormuze up to the Malacca Strait. It implies that India is on the threshold of becoming a regional super power, having a large say in the geopolitical affairs in South Asia. This situation has come about as a result of the economic liberalisation in last decade of the twentieth century, causing the economy to grow at appreciable rates of 7-8 % per year. Economic opportunities in India have made the world sit up and take notice, causing a huge influx of investments in all business and industrial sectors.
4. Given the above situation, India's electrical energy needs are growing by leaps and bounds, and at a very rapid pace. The sources for generation of electricity to support this unprecedented growth are not adequate. Therefore, it is imperative that India must look for alternative sources to generate sufficient electricity not only to cater for future growth but also to bridge the gap between the demand and supply. This will also help India for realisation of her role as a regional power to satisfy her strategic aspirations.
Justification of the Study
5. India is concern for energy security in general and electrical energy in particular for its economic development and uplifting the standard of living of its citizen. Indo-us civilian nuclear deal is a step towards to solve India's energy problem which encompasses the generation of electricity from nuclear energy and transfer of sensitive technology including supply of raw material. But the deal has more strategic and international connotation. If we adopt the perspective of twenty years hence, will India be able to achieve its energy security?
6. The scope of this study would be to look into India's electric energy requirement by 2030, highlighting the electricity generating capacity and gap between demand and supply. Also to analyze the nuclear power plants' generating capacity in a backdrop of Indo-US civilian nuclear deal with its strategic implications for India. The study would also suggest a way ahead for India to achieve total energy security. Other related issues such as electrification, transmission, distribution, billing, electrical energy conservation and regulatory commissions are not considered in this study.
7. Energy Security. A country's ability to optimize its energy resource portfolio and supply of energy services for the desired level of services that will sustain economic growth and poverty reduction. It is a broad umbrella covers all type of energy and economic growth.
8. Nuclear Energy and Energy Security. Nuclear Energy is the kinetic energy of the fragments that result from the fissioning or splitting of uranium and plutonium nuclei when they absorb neutrons. The kinetic energy is converted to heat as the fragments are slowed, and this heat is use to convert water into steam which in turn used for rotation of turbine thus producing electricity. This nuclear energy supplements the total energy requirement of our country with an aim to achieve energy security from all the sources including renewable, hydro and coal.
Methods of Data Collection
9. The major source of data collection has been through library books, journals, articles from magazine & newspaper as well as internet.
Organisation of the Dissertation (Chapterisation)
10. The dissertation is organised as under : -
(a) Chapter I - Introduction and Methodology. This chapter introduces the subject ‘India's energy security with special reference to Indo-us nuclear deal.' It also lays down the ‘Statement of Problem' providing a justification for the study and defines the scope of dissertation. The chapter also defines security in general and energy security in particular. Energy security encompasses oil, gas and electricity. The focus will be on nuclear power element of electricity/power security.
(b) Chapter II - India's Electrical Energy Need and Present Status. This chapter brings out statistical data about the present power status in India from all sources including the contribution of nuclear power plants and predicting economic growth vis-a-vis India's electrical energy needs by 2030.
(c) Chapter III - Nuclear Energy - Its Myth and Reality. This chapter analysis the nuclear power generating capacity by 2030, technology and raw material requirement and its contribution towards achieving energy security. It also covers advantages and disadvantages of nuclear power over conventional sources of power generation.
(d) Chapter IV - Indo-US Civilian Nuclear Deal. This chapter covers India's nuclear history in brief and Indo-US civilian nuclear deal in detail. It also brings out the stance of International atomic Energy Agency (IAEA) and Nuclear Suppliers Group (NSG). This chapter also highlights the pros and cons and views of political parties in India.
(e) Chapter V - Implications of the Deal. This chapter highlights the strategic implications in terms of economic, geopolitical and military of Indo-US civilian nuclear deal.
(f) Chapter VI - The Way Ahead for Energy Security. Initially India neglected its power requirement and now going for nuclear power. On one hand developed country like Germany is against nuclear power and on other side France in going for it. This chapter covers the analysis of this dichotomy and India's necessity to go for it. In the end, recommendations for way ahead for India to achieve total energy security.
CHAPTER - II
INDIA'S ELECTRICAL ENERGY NEED AND PRESENT STATUS
India's Energy Security Challenge
1. Electricity is one of the most important inputs to support the growing economy. Today, there is the requisite buying power to support the rapid growth of the power sector. At the same time, there are severe resources constrains looming large. The non-availability of power in required amounts could, in fact, severely restrict our developmental aspirations.
2. There is a need to look at nuclear energy associated with processes involving the nucleus of an atom in several million folds higher than the energy associated with processes that involve electron that orbit around the nucleus. The later forms the basis of energy through burning of fossil fuels. Nuclear energy released through fission or fusion of atomic nuclei and solar energy that we receive from the sun are the only two viable basic energy sources capable of meeting our long term energy needs.
3. Electricity - Present Status in India? India is a power deficit country with a high base and peak load deficit of around 9.8% and 16.6%, respectively. Currently, though coal-based plants contribute around 58 % of the installed capacity, that alone would not be sufficient to secure and fulfill India's long-term Energy requirements. A broad estimate suggests that if the country's coal consumption continues to grow at 5% pa, going ahead we might run out of coal reserves over the next 40-50 years, and even if new coal reserves are discovered and extracted, we might still run out of coal in the next 70-80 years. Installed Capacity > 120 GW. Gross Generation is 620 billion kWh. The current per capita power consumption in India is about 612 KWH per year. While the world average is 2596 KWH. Out of total power available in India, thermal power constitutes 64.6%, hydro power 24.7% and nuclear power 2.9%. The present power status of India is shown in fig 1. The details of nuclear power is shown in fig 2
Indian Energy Scenarios: 2030
4. Nuclear Power will play a significant role in the long-term energy mix of the country with the government planning to raise its contribution from the current level of 2.9% (4,120 MW) to around 10% (64,000-65,000 MW) of the country's installed capacity by 2030.
5. Details of Nuclear Power Plants in India. Currently, seventeen nuclear power reactors produce 4,120 MW (2.9% of total installed base).
Total capacity (MW)
220 x 3
220 x 2
220 x 2
220 x 2
100 x 1,
200 x 1,
220 x 2
160 x 2,
540 x 2
6. The projects under construction are:
Total capacity (MW)
220 x 1
220 x 2
1000 x 2
500 x 1
7. The planned projects are:
Total capacity (MW)
640 x 2
640 x 2
1200 x 2
1600 x 4
1000 x 1,
1500 x 1
470 x 4
1000 x 2
640 x 4
8. The following projects are firmly proposed.
Total capacity (MW)
1200 x 2
1600 x 2
AP Genco 49%
2000 x 1
9. The following projects are proposed and to be confirmed soon.
Total capacity (MW)
1200 x 2
10. Summary of total nuclear power generation capacity by 2030.
Total capacity (MW)
Present nuclear power reactors
Projects under construction
Projects firmly proposed
Proposed and to be confirmed
11. Department of Atomic Energy. This independent department has all matter related to atomic energy under its purview, and is responsible for designing, commissioning, constructing and operating nuclear power plants.
12. National Electricity Policy. The GOI decided and notified the National Electricity Policy in Feb 2005 (Min of Power, 2005). The policy aims at accelerated development of power sector, providing supply of electricity to all areas and protecting interests of consumers. The policy prescribes development of rural electrification distribution backbone to be completed in next five years, Some of the points on which the policy emphasizes on are:-
(a) Nuclear power is an established source of energy to meet the base load demand. Share of nuclear power in the overall capacity profile will need to be increased significantly.
(b) Creation of adequate generation capacity with a spinning reserve of a least 5% by 2012 with availability of installed capacity at 85%.
(c) Full development of hydro potential.
(d) Development of National Grid.
(e) Exploitation of non-conventional energy such as small hydro, solar, biomass and wind for additional power generation capacity.
13. Outcome of the Deal. The Indian nuclear power industry is expected to undergo a significant expansion in the coming years thanks in part to the passing of the Indo-US nuclear deal. This agreement will allow India to carry out trade of nuclear fuel and technologies with other countries and significantly enhance its power generation capacity. India is expected to generate an additional 25,000 MW of nuclear power by 2020, bringing total estimated nuclear power generation to 45,000 MW. Following a waiver from the Nuclear Suppliers Group in September 2008 which allowed it to commence international nuclear trade, India has signed nuclear deals with several other countries including France, United States, Namibia, Mongolia and Kazakhstan while the framework for similar deals with Canada and United Kingdom are also being prepared. In February 2009, India also signed a $700 million deal with Russia for the supply of 2000 tons nuclear fuel. India now envisages to increase the contribution of nuclear power to overall electricity generation capacity from 4.2% to 9% within 25 years. In 2010, India's installed nuclear power generation capacity will increase to 6,000 MW. As of 2009, India stands 9th in the world in terms of number of operational nuclear power reactors and is constructing 9 more, including two EPRs being constructed by France's Areva. Indigenous atomic reactors include TAPS-3, and -4, both of which are 540 MW reactors. India's $717 million fast breeder reactor project is expected to be operational by 2010.
14. Nuclear Power Growth. India, being a non-signatory of the Nuclear Non-Proliferation Treaty, has been subjected to a defacto nuclear embargo from members of the Nuclear Suppliers Group (NSG) cartel. This has prevented India from obtaining commercial nuclear fuel, nuclear power plant components and services from the international market, thereby forcing India to develop its own fuel, components and services for nuclear power generation. The NSG embargo has had both negative and positive consequences for India's Nuclear Industry. On one hand, the NSG regime has constrained India from freely importing nuclear fuel at the volume and cost levels it would like to support the country's goals of expanding its nuclear power generation capacity to at least 20,000 MW by 2020. Also, by precluding India from taking advantage of the economies of scale and safety innovations of the global nuclear industry, the NSG regime has driven up the capital and operating costs and damaged the achievable safety potential of Indian nuclear power plants. On the other hand, the NSG embargo has forced the Indian government and bureaucracy to support and actively fund the development of Indian nuclear technologies and industrial capacities in all key areas required to create and maintain a domestic nuclear industry. This has resulted in the creation of a large pool of nuclear scientists, engineers and technicians that have developed new and unique innovations in the areas of Fast Breeder Reactors, Thermal Breeder Reactors, the Thorium fuel cycle, nuclear fuel reprocessing and Tritium extraction & production. Ironically, had the NSG sanctions not been in place, it would have been far more cost effective for India to import foreign nuclear power plants and nuclear fuels than to fund the development of Indian nuclear power generation technology, building of India's own nuclear reactors, and the development of domestic uranium mining, milling and refining capacity.
15. India has already been using imported enriched uranium and are currently under International Atomic Energy Agency (IAEA) safeguards, but it has developed various aspects of the nuclear fuel cycle to support its reactors. Development of select technologies has been strongly affected by limited imports. Use of heavy water reactors has been particularly attractive for the nation because it allows Uranium to be burnt with little to no enrichment capabilities. India has also done a great amount of work in the development of a Thorium centered fuel cycle. While Uranium deposits in the nation are limited, there are much greater reserves of Thorium and it could provide hundreds of times the energy with the same mass of fuel. The fact that Thorium can theoretically be utilized in heavy water reactors has tied the development of the two. A prototype reactor that would burn Uranium-Plutonium fuel while irradiating a Thorium blanket is under construction at the Madras/Kalpakkam Atomic Power Station.
CHAPTER - III
NUCLEAR ENERGY - ITS MYTH AND REALITY
Nuclear Energy in India
1. Nuclear energy is the fourth-largest source of electricity in India after thermal, hydro and renewable sources of electricity. As of 2008, India has 17 nuclear power plants in operation generating 4,120 MW while 6 other are under construction and are expected to generate an additional 3,160 MW. Since early 1990s, Russia has been a major source of nuclear fuel to India. Due to dwindling domestic uranium reserves, electricity generation from nuclear power in India declined by 12.83% from 2006 to 2008. To appreciate the Indo US nuclear deal better, let us understand the basics of generation of nuclear energy.
2. Nuclear Reactor. The basis of nuclear power is the fission process. This is the process of splitting of a fissionable atom's nucleus, releasing energy in the form of heat, which can be converted through steam turbine and a generator into electricity. The only naturally occurring fissionable material is Uranium and said to be 'fissile' because its nucleus has an affinity to a colliding neutron which it absorbs, splits into two smaller particles and emits two or more neutrons and produces vast amounts of energy. This process is called fission chain reaction. The neutrons produced as result of fission reaction in the reactor have excessive energy levels and they move at a great speed. In a nuclear reactor a chain reaction cannot be sustained with fast moving neutrons. So the fast paced neutrons are slowed down by an element called a moderator. The two substances that are used as a moderator in a Uranium reactor are heavy water and graphite. A majority of the nuclear reactors in the world use natural uranium as fuel and light water as moderator and hence they are called the Light Water Reactor. These are essentially boiling water reactor (BWR) or Pressurized water reactor (PWR). In a BWR, the cooling water is allowed to boil inside the reactor at a temp of 290 deg and pressure of 70 atmospheres. The steam is then fed directly to the turbines and re-circulated to the reactor. In a PWR the pressure inside the reactor vessel is kept at 150 atmospheres so as to prevent the cooling water from boiling at temperatures up to 350 deg. This water is fed out of the reactor vessel to a steam generator where it passes through thousands of tubes immersed in water at a much lower pressure. The secondary cooling water boils and drives the turbines. The other type of reactors those use heavy water as moderator is called Pressurised Heavy Water Reactor (PHWR).
3. Nuclear Fuel Cycle. Nuclear fuel needs to be processed optimally for use and thereafter disposed off safely. All these activities form part of the nuclear fuel cycle. India's share of Natural Uranium reserve of the entire globe is 0.8 %. At the same time that of Thorium is over 32% of the world's reserve. A Uranium Mill is a chemical plant designed to extract uranium from ore. The final product that goes out of from the mill, commonly referred to as "yellow cake", contains more than 60% of uranium.
4. Nuclear Waste Reprocessing. The fuel which went into the reactor is removed after anywhere between 18 months to about 3 years. This spent fuel highly radioactive waste. The Uranium which comprises about 96% of the spent fuel can be recycled as fresh fuel elements. It could be used to fuel breeder reactors or can be used to make a nuclear bomb.
5. Uranium Enrichment. Purification and chemical conversion of uranium concentrate to uranium hexafluoride is needed since yellowcake is not directly usable as nuclear reactor fuel. The uranium hexafluoride is used in a natural uranium fuel reactor. The enriched uranium is now sent to a fuel fabrication plant where it is changed into uranium dioxide powder. The powder is pressed into small pellets, which are then put into metal tubes, forming fuel rods. These fuel rods are put together to form a fuel assembly.
Advantages and Disadvantages
6. The advantages of electricity produced from nuclear source are as follows :-
(a) Cost- Effective Option. A kilogram of uranium can produces a million times more energy as compared to a kilogram of coal or a kilogram of hydrocarbon. One kg uranium can produce as much electricity as 1500 tons of coal. It will not only diversify India's power generation portfolio but also reduces pressure on railway transportation of coal for the thermal power plants.
(b) Environmentally Sustainable. Non-emission of greenhouse gases that have threatened the global climate. The reduction in annual coal consumption ~ 100 Million Tons. Reduction in annual CO2 Emissions > 170 Million Tons. This will help ease global demand for crude oil and natural gas.
7. The disadvantages of nuclear power plants are as follows :-
(a) Initial Cost. Conventional nuclear plants are expensive, being perhaps two to three times the cost of comparable coal or gasification plants, with much of this expenditure required to insure the safety of the public. The production process is relatively simple and involves using nuclear heat to create steam that subsequently drives a turbine generator. However, the high cost of the plants (billions of dollars) can introduce potentially high financial risks to owners and investors alike, as history has demonstrated. While the plants are relatively inefficient (~33%), the price of nuclear fuel, as with coal, is a fraction of the cost of natural gas. Nuclear plants operate at full power for technical reasons and avoid the daily routine large load swings of the electrical grid. Fossil plants are normally used for such purposes.
India's Nuclear Energy Programme
8. India's nuclear resource endowments are modest in terms of uranium, which is the only naturally available material that contains a fissionable component. On other hand thorium endowments are vast. But unlike uranium it is non fissionable.
9. Three-StageProgramme India's strategies for large scale development of nuclear energy focused towards utilization of thorium and three stages nuclear power program is as given under :
(a) The first stage of Indian Nuclear Power employs the PHWRs fuelled by uranium, to produce plutonium.
(b) The second stage, Plutonium put in Fast breeder reactor with uranium, with a blanket of thorium, to convert some of the thorium into uranium.
(c) In the third stage, Advanced Heavy Water Reactors (AHWRs) would burn Thorium and U 233 as fuel. This is what we finally want to achieve in the years to come. The AHWR test reactor is in final phase of design.
10. Nuclear Energy for India's Energy Security.& The
CHAPTER - IV
Indo - US Civilian Nuclear Deal
1. Historical Perspective. The nuclear energy history started way back in 1950 when US helped India to develop nuclear energy under the atoms for peace program. In 1968 India refused to sign the Non-Proliferation Treaty (NPT) claiming it was biased. India, Pakistan and Israel never signed NPT and North Korea signed but withdrew later. In 1974 came a turning point when India tested its first nuclear bomb made by the materials from the Canadian reactor. Canada and US stopped selling nuclear fuel to India and US placed severe restrictions on transfer of dual use technologies to India. India was a target of American ideological and geopolitical antagonism. Bilateral relations between the two countries were victims of incompatible obsessions of India's with Pakistan and America's with the erstwhile USSR.
2. Post Pokharan II. India's nuclear blasts of 1998 not only shook the Thar desert, but also rocked the very foundations of the Global Nuclear Order. US administration promptly imposed sanctions and also mobilized other nations in doing so. India's nuclear policy thus became the single most contentious issue in bilateral relations. The country was treated like pariah, especially by the US and 45 member Nuclear Suppliers Group (NSG) countries and isolated India for more than three decades, refusing nuclear co-operation. Sanctions were heaped on India. Indian nuclear scientists were unwelcome at international seminars in their field.
3. Post 9/11. In 2000, the US has moved to build a "strategic partnership" with India. The terrorists strike of 11 Sep 01 resulted in convergence of strategic interests of both the sides. India supported American actions whole heartedly and defence cooperation was at new heights. An agreement on Next Steps in Strategic Partnership (NSSP) was signed in Jan 2004 which included areas such as missile defence, cooperation in civilian nuclear, space programme and high technology trade. The foundation and indeed the underpinning of the nuclear agreement was the signing of a ten year New Framework for Defence Relationship (NFDR) in June 2005 as a prelude to the historic agreement of 18 Jul 05, when India and the US agreed to cooperate in the field of civilian nuclear agreement.
4. On 18 Jul 2005, India and the US sign the landmark Civilian Nuclear Deal in Washington DC and surprise the world. The deal was signed by US President Mr George Bush and Indian Prime Minister Dr Manmohan Singh. The US dismantle the complex architecture that it had set up to isolate India after 1974 nuclear test and deny it access to civilian nuclear technology.
5. Hyde Act. On 18 Dec 2006, the US congress passed the Henry J Hyde United States-India peaceful atomic energy co-operation act 2006 (PAEC Act 2006) popularly called as ‘Hyde Act', amending the atomic energy act that had prohibited American entities from trading with countries that didn't sign the NPT or had done a nuclear test. India fitted into both categories. The US Senate voted emphatically in favor of 86 to 13. In reality, the Hyde Act is an enabling legislation passed by the US congress that merely provided waiver to Bush administration to strike the 123 agreement with India. Though binding on the US administration, it legally doesn't/can't lay any obligations on India. Only the provisions of 123 agreement will tether India.
6. Pitfalls in the Hyde Act. The hawks in India raised various contentious issues figuring in the Hyde Act. These could be broadly listed as:-
(a) Enrichment Technology. Although the stated US policy is not to sell enrichment and reprocessing technology to any country, the Hyde Act makes it a law in India's case. it signals a continuing mistrust.
(b) Uncertainty. The bill specifies that the president must annually certify to the Congress that India is not in violation of non-proliferation goals.
(c) Iran Fixation. There are references, throughout the bill for the need to ensure that India toes the US line on Iran's nuclear misadventures. India says it refuses to be dictated to, as foreign policy is a sovereign preserve.
(d) Ghost of Tarapur. A Clause has been inserted to restrict fuel supply to operational levels and prevent stockpiling. India sees this as a bargaining tool as was done in the case of Tarapur reactors.
(e) No Nuclear Test. Another contentious aspect of the Act is the stipulation that nuclear cooperation will end, should India conduct a N-test. In other words, US wants India to adhere to CTBT provisions that it does not itself commit to.
7. 123 Agreement. The US House of Representatives passed the bill on 28 September 2008. On October 1, 2008 the US Senate also approved the civilian nuclear agreement allowing India to purchase nuclear fuel and technology from the United States. On October 8, 2008 U.S. President, George W. Bush, signed the legislation on the Indo-US nuclear deal, approved by the U.S. Congress, into law, now called the United States-India Nuclear Cooperation Approval and Non-proliferation Enhancement Act, or in short the 123 agreement. Heavily endorsed by the White House, the agreement is thought to be a major victory to George W. Bush's foreign policy initiative and was described by many lawmakers as a cornerstone of the new strategic partnership between the two countries. The agreement is widely considered to help India fulfill its soaring energy demands and boost US and India into a strategic partnership.
8. A Unique Waiver. Significantly, US laws require that nuclear commerce with another country can commence only if, first, it hasn't conducted a nuclear test; two, if it agrees to place all of its nuclear reactors under safeguards and three, it should not be involved in devp nuclear wpns. These three conditions have been waived as far as India is concerned; a waiver that is unique, significant and unprecedented.
9. IAEA. International Atomic Energy Agency (IAEA) was established in 1957 as a UN body to promote peaceful uses of nuclear energy and nuclear safety as well as to restrict the military uses of nuclear power through protocols and agreements. It reports to the UNSC. On 01 Aug 2008, IAEA clears India- specific safeguards agreement that defines its level of supervision of civilian plants. This arrangement will account for and control the use of nuclear material. Verification in the international system ensures uranium is used peacefully. This means physical inspection and audits of records of all movements and transactions of nuclear material. A separation plan was announced by the Indian government, separating its military and civilian facilities. India would place in phases 14 of its 22 power reactors under IAEA safeguards. Eight plants would be left outside international safeguards.
10. NSG. Nuclear Suppliers Group (NSG) is group of 45 countries that controls and gives guidelines for resources and technology of nuclear material so as to curb proliferation. It was founded in 1975. On 06 Sep 2008, Nuclear Suppliers Group (NSG) wavier comes through after intense negotiations among its 45 members to allow nuclear trade with India.
11. Highlights of the Deal. India's power needs are growing by leaps and bounds and at a very rapid pace. The conventional sources for production of electricity to support this unprecedented growth are not adequate. Therefore, it is imperative for India to look for alternative sources of energy. This deal also cater for future growth and realization of her role as a regional power to satisfy her strategic aspirations. The other advantages are :-
(a) It covers civil nuclear cooperation including high technology transfer.
(b) It grant right to India to reprocess spent fuel & assurance fuel supply for nuclear reactors.
(c) No role for any party other than IAEA.
(d) It is applicable for 40 years, extendable for 10 year periods.
(e) No negative impact on India's strategic nuclear programme.
(f) It brought India as major player in international arena.
(g) India can use the nuclear material not supplied under the agreement as it wants, and is free to build additional indigenous nuclear reactors for strategic purpose.
(h) Signing CTBT is not mandatory for India.
(j) The deal will generate worldwide business worth $ 100 billion, allow Indian companies to supply components to foreign nuclear plant makers, offer power generation opportunities to Indian firms. For eg : ONGC joint venture with UCIL is planning to get oversea right for uranium exploration.
(k) Termination is a multi- layered approach. US the right to terminate on a one year's written notice or violations of the IAEA safeguards agreement.
(l) ITER. Recently, India has joined the elite club of seven nations as a full partner in an ambitious multi-billion energy venture. This is known as the International Thermonuclear Experimental Reactor (ITER) project. The other partners are US, EU, Russia, Japan, South Korea and China. The main ITER facility will be built in France and all partners will participate in its construction, development and research. ITER is the experimental step between the latest studies of plasma physics and future electricity-producing fusion power plants. The ambitious project is a 30 year project. In the first 10 years, reactor will be built and next 20 years experiments will be conducted for power generation. Currently it is a 500 MW project. Once the prototype is made, it will be cloned for mass scale production.
US Interests in the Deal
12. The nuclear deal is an indication as to how far the US is willing to go in the context of new strategic partnership. The deal has provided the US enormous strategic leverage in Asia. The factors explaining the American interests in the deal are as follows:-
(a) For once the Americans have been realistic in recognizing India's exemplary record in non-proliferation despite its exclusion from the international regime.
(b) The deal does not provide any assistance whatsoever to India's nuclear weapons programme.
(c) It places 65% of India's nuclear facilities under IAEA safeguards. This is a significant net positive for the global non-proliferation regime.
(d) India's sizeable nuclear market is estimated at $ 100 bn and US hopes to corner a lion's share.
(e) India's overdependence and huge appetite for oil has put it in direct competition with the US for dwindling oil prices, resulting in fluctuating prices.
(f) If India is able to generate the planned capacity of 20 GWe of nuclear energy by 2020 and cut down its consumption of fossil fuel that much, it would reduce its Greenhouse contribution by as much as the entire EU put together has committed in the Kyoto protocol.
(g) The US sees India as a prospective counter to China in the Asian region and therefore, is mending fences with India in a bid to contain China.
Indian Interests in the Deal
13. For India, the deal represents a net positive situation for the following reasons:-
(a) It does not curtail its domain of sovereign decision making regarding its weapons programme.
(b) It seems to be the only viable international framework that can accommodate India's unique status and secure it access to civilian nuclear energy.
(c) India's nuclear energy programme is still uncertain and hinges on the success of the Fast Breeder Reactors.
(d) It will end three decades of nuclear isolation and would be a tacit recognition about India's status as a nuclear weapons power.
(e) It will permit India to import dual use technology that will strengthen R & D in the country.
(f) It will bring in new high end and cost effective technologies, proven designs for safer and larger reactors.
CHAPTER - V
IMPLICATIONS OF THE DEAL
Impact on Energy Security
1. Growing Economy. India's economy will overtake that of the US as the world's second largest after China's by about 2040. However, in order to sustain the current growth rate, India's energy supplies must increase at an average rate of six per cent per annum. The demand for electricity is likely to grow from 130 gigawatts (GW) at present to 1,300 GW by 2050. India has very limited oil and natural gas reserves, and already imports over 70 per cent of its crude oil needs.
2. Low Share of Nuclear Power in Energy Basket. At 3,500 megawatts (MW) or 3.50 GW per annum, at present nuclear energy contributes only three per cent to India's energy basket. India's goal for the year 2000 was to achieve nuclear power capacity of 10,000 MW. That turned out to be too ambitious because India possesses neither modern, cost-effective nuclear technology nor sufficient uranium reserves to appreciably increase its capacity for generating nuclear power. Modern nuclear reactors average 1,000 MW of power while Indian reactors average only 220 MW. India has two nuclear reactors with 540 MW capacities at Tarapur. With continuing indigenous research, such capacity is expected to be enhanced to 700 MW at best. Any further increase in the ability to generate higher capacities can come only from the import of nuclear power reactor technology. In case the thorium cycle is mastered successfully over the next decade or so, India could increase its nuclear power capacity to between 275 and 300 GW by 2050. Even that would require external supplies of nuclear fuel. It, therefore, emerges quite clearly that India needs both modern nuclear reactor technology and nuclear fuel supplies to enhance its capacity for generating nuclear power and to reduce its dependence on fossil fuels that add to global warming. India's endeavour should be to eventually enhance the share of nuclear power in its energy basket to more than 25 to 30 per cent like France, Japan and several other countries. Hence, the Indo-US nuclear deal is primarily about nuclear energy. It will open up the Indian market for nuclear trade; and, by increasing the share of nuclear energy in India's energy basket; it will help reduce global warming.
3. The Indo-US nuclear agreement is in India's interest. It marks the end of the nuclear apartheid India has been subject to in the last three decades. The deal recognizes India as a nuclear power. The nuclear power sector had suffered a severe setback and was facing a crippling shortage of fuel. Also, India couldn't import new technology or reactors from other countries. It allowed India access to civilian nuclear technology while keeping its option to develop its nuclear weapons programme without hindrance. It marks the end of the nuclear apartheid India has been subject to in the last three decades. India needs to deepen its relations with the US. At a Same time India needs energy security for its economic growth, geo-political and global strategic standing. India has joined the exclusive club of the nuclear haves. Earlier it was a privilege only the so called P5 nations US, Russia, France, UK and China. The deal changes the status quo primarily on three accounts. Firstly, it allows the flow of nuclear fuel, helping India's nuclear program grow faster. Secondly, It will open up trade for global players to export reactors to India. Lastly, it will open up opportunities for export by Indian companies.
4. The deal allows India to immediately negotiate with all NSG countries to provide fuel for its reactors it designates as civilians and puts under safeguards. India will now import nuclear reactors and sensitive technology for reprocessing and enrichment from a host of countries. It can pursue its nuclear weapons programme without any hitches. According to Mr SK Jain Chairman & MD NPCIL, in Jul 09 India has received uranium from Russia and France for use in its safeguarded reactors. This is consequent to the NSG relaxing its guidelines last year to allow its member country to have nuclear trade with India.
5. The India will need 125 billon watts of electricity by 2050, which is not possible without nuclear energy. Indian Atomic Energy Commissions released vision 2020 aims at a massive generation capacity of 52,000 MW from the present of over 4120 MW. To further accelerate the growth of the nuclear power, it is planned to construct a few Light Water Reactor based plants with foreign collaboration. Also looking forward to launch of construction of a 300 MW Advanced Heavy Water Reactor. Besides being a technology demonstrator for large scale Thorium use, this reactor represents an advanced reactor system that would meet all objectives of a fourth generation system.
6. In the race to sell reactors to India, France has offered six 1,600 MW third generation European Pressurised Water Reactors. Russia, already in the process of constructing two 1000 MW reactors have offered another six reactors at the same site.These are being built at Kudankulam in Tamil Nadu. Russia will supply the enriched fuel and India will reprocess it and keep the plutonium. These two units will be operationalised within next two years.
7. India Gains, US Doesn't Lose. The agreement addresses all the core concerns of India. These are:-
(a) Right to Test. The agreement does not impose any restrictions on India's freedom to conduct a nuclear test. It, however, offers immediate bilateral consultations in the event of an Indian test.
(b) Assured Fuel Supply. India has been able to extract iron-clad guarantees on fuel supplies. The agreement fully commits the US to help India develop a “strat res” of nuclear fuel for the entire lifetime of the reactors. It also ensures that the commitment to facilitate fuel sup is absolute and is not defined by the circumstances of the termination of the bilateral agreement.
(c) Right to Reprocess. The agreement concedes India's unambiguous right to reprocess spent fuel- a key element of our three-stage civilian nuclear programme.
(d) Right to Return. The agreement calls for consultations in the event the US seeks to exercise this right and recognises that exercising this right would have profound consequences for bilateral relations. The right of return, however, does not derogate from India's right for assured fuel sup from the international community.
(e) Safeguards. The 123 agreement offers no role for any party other than the IAEA in the verification of India's nuclear facilities for peaceful use of imported technology. Apprehensions about a special US role seem entirely misplaced.
(f) Integrity of India's Nuclear Programme. The agreement makes it clear that its implementation will not interfere with any other activity, technology for which is acquired “independent of this agreement”.
(g) Full Civil Co-operation. The scope 123 agreement include a wide range of areas from nuclear research to safety to full civil nuclear co-operation.
(h) Foreign Policy Autonomy. There is no secret unwritten agenda in the 123 agreement. Unlike the non-binding provisions of the Hyde Act, there is no reference to Iran or other foreign policy issues in the 123 agreement.
Other Implications for India
8. It is abundantly clear that the agreement is more than just about nuclear energy for India. The agreement has several strategic connotations, including with regard to China. The agreement is an outcome of the US' recognition that India is a major power in the 21st century and that it has a vital role to play in the emerging Asian strategic framework. If this century is going to be an Asian century, as has been widely predicted, the major powers would be the US, China, Russia, Japan, and India. Hence, it is strategically important for the US to have a strengthened and comprehensive relationship with India. It should also be noted that both the US and India have concerns regarding China's rise and more specifically its military modernisation which will have a bearing on the way China conducts business with the rest of the world.
9. Military Benefits to India. Indian military is in need to diversify its sourcing of military hardware. Russia has been a very reliable source for the past 40 years. This source has to be diversified. Ultimately all military hardware will have to be produced in India. But development time in India is too long and success factor is low. This has to be speeded up. The only way at India's disposal is buy its immediate
needs and import technology to develop its own weapon system. It is a bit expensive up front but pays dividend later as India joins the select group of countries as a source of military hardware.
10. Uranium used for the weapons program has been separate from the power program, using Uranium from indigenous reserves. This domestic reserve of 80,000 to 112,000 tons of uranium (approx 1% of global uranium reserves) is large enough to supply all of India's commercial and military reactors as well as supply all the needs of India's nuclear weapons arsenal. Currently, India's nuclear power reactors consume, at most, 478 metric tonnes of uranium per year. Even if India were quadruple its nuclear power output (and reactor base) to 20GWe by 2020, nuclear power generation would only consume 2000 metric tonnes of uranium per annum. Based on India's known commercially viable reserves of 80,000 to 112,000 tons of uranium, this represents a 40 to 50 years uranium supply for India's nuclear power reactors (note with reprocessing and breeder reactor technology, this supply could be stretched out many times over). Furthermore, the uranium requirements of India's Nuclear Arsenal are only a fifteenth (1/15) of that required for power generation (approx. 32 tonnes), meaning that India's domestic fissile material supply is more than enough to meet all needs for it strategic nuclear arsenal. Therefore, India has sufficient uranium resources to meet its strategic and power requirements for the foreseeable future.
11. Technological Leapfrog. India will also benefit when technology denial regimes are wound down and the country finally emerges from the dual-use technologies doghouse. Today, virtually every technology can be classified as dual use. India will be able to get state-of-the-art weapons and C4ISR technology. Indian companies will be able to enter into cutting-edge joint R&D projects, such as those in ballistic missile defence, with the world's leading defence contractors. The Indian Space Research Organisation (ISRO) will benefit from commercially available space technologies. Due to the sanctions imposed on it, India was not allowed to purchase supercomputers for weather forecasting and would be able to do so once sanctions are fully lifted. Similarly, India will benefit in many other areas such as medical diagnostics and inertial navigation equipment as these employ dual-use technologies. Indian scientists will be able to travel freely and participate in international conferences for which they are so far routinely denied Visas. While some of the benefits are tangible and easy to calculate, many others will be indirect and will contribute in a substantive manner to India's overall growth. For example, the lifting of the remaining sanctions is likely to result in the opening of the floodgates of foreign direct investment (FDI) as most Multinational Corporations take their bearings from the policies of their respective governments.
12. Political Benefits to India. After 50 years of isolation, India will have the opportunity to say something, in world forums like UN, WTO and World monetary lending institutions, and be heard. This was not the case previously. Reasons - India had no clout. With western economies in the future, tied more and more with India, the latter's clout will improve. There will be frequent inter-government exchanges on matters of mutual interest. India could become a full member of the select group of G-8 members. Gone will be the days that US politicians will heap scorn on India, the way they are doing it today. The Indo - US Nuclear deal is in fact dumping the past and unlocking the hidden potential of the future. In addition Pakistan may get the cue and begin a rethink of its policies towards India.
13. Impact on Foreign Policy. Official international reactions to the deal have been mostly positive. Clearly, India's responsible behaviour as a state with nuclear weapons and economic resurgence is being viewed favourably across the world. Russia, UK, France and Germany wholeheartedly supported the deal. Among the five permanent members of the UN Security Council with nuclear weapons, only China has opposed the agreement on the grounds that it would be a “hard blow” to the global nonproliferation regime. However, in the long term, the Indo-US nuclear deal is unlikely to have any negative influence on India-China relations as the pragmatic Chinese would much rather take up the possibility of nuclear trade with India than be hamstrung by the geo-politics of the deal. However, China will carefully watch the emerging contours of the Indio-US strategic partnership to discern whether it has an anti-China strand in it. It is, hence, the most striking new foreign policy initiative in the early 21st century - an initiative that will have positive geo-political repercussions for many decades to come.
14. By voting with the world's democracies in favour of UN and IAEA sanctions on Iran's nuclear programme despite its dependence on Iranian crude oil, India has conclusively demonstrated that it is ready to assume greater regional responsibilities. The civil nuclear cooperation deal will usher the country into the emerging poly-centric world order as a mainstream international power that is eligible for sophisticated technology transfer and unrestricted commerce.
Impact on National Security
15. Credible Minimum Deterrence. India's repeatedly stated policy is one of minimum deterrence. Of course Indian Government did not spell out the number and types of weapons needed to establish a minimum deterrence. Nevertheless, the requirements of minimum deterrence can be examined objectively and without cold war preconceptions. Minimal Deterrence does not require a boundless open-ended arsenal, nor that do your weapons match in number and strength those of your adversaries. It only demands that you have enough capability, in a second strike, to inflict “unacceptable damage” to the other side. We already have a weapons grade Pu stock of half a ton (worth about 100 warheads), plus nearly 12 tons of reactor grade Pu (worth over a 1000 warheads, although of indeterminate quality). That should suffice for even for a much more conservative strategy. Therefore, India did not, apparently go into the nuclear Deal to build much larger nuclear arsenal.
16. Impact on nuclear armament in S. Asia. The DAE argument to protect the Breeder from Inspections gives the impression of keeping the options open for a larger nuclear arsenal than minimal deterrence. It can raise alarm in Pakistan, motivate them to go for larger arms buildup and trigger an arms race, raise concerns in China and even in the US on whether India is planning to go beyond minimal deterrence.
17. The deal is likely to spur India to join the Proliferation Security Initiative (PSI) and to be willing to back other multilateral non-proliferation efforts. The final implementation of the agreement will open up new possibilities for strategic investments in India. Given its track record in international affairs, a militarily strong, technologically self-reliant and economically resurgent India will be a force for regional peace and stability.
Implications for US
18. There are no permanent enemies and friends. There are only permanent interests of the nation. Similarly, the US has its own interest in the Asian region and this deal is strategically important to US. The US was looking for a strong counter weight to China and its growing dominance in Asia and the world. India was key to its strategic game plan in the region. The deal would remove the years of mistrust between the two apart from allowing US firms to compete for nuclear and defence projects. The deal was sign during the regime of previous US President Mr Greoge Bush. It is important to watch how the present Govt in US takes its stance on this deal. From this point of view, the visit of US Secretary for State Mrs Hilary Clinton in Jul 09 was most significant. She clearly stated that the signing of CTBT is not essential for continuation of this deal. All in all the oldest democracy wants a strategic partnership with the largest democracy.
19. Economic Benefits to US. U.S. expects that such a deal could spur India's economic growth and bring in $100 billion in the next decade for nuclear power plants, of which the US wants a share. U.S. also expects India's economic growth will make a counterweight to China. If India sets up 10 large size nuclear power plants, which is its intent in next 15-20 years, India will import technology and hardware from US for at least half of these projects (technology for the remaining may come from elsewhere). Each of these plants at a green field site will cost about $4 billion. In short, orders worth $15-20 billion could be placed with the US companies in next 6 to 8 years. Remaining orders may go to France, Germany, Canada and UK. Fund for these installations will come to India either in form of FDI or soft & commercial loans. Banks and equipment manufacturers abroad will be delighted to make this amount available to India. In return India will pay it back with goods and services export, in the same way China did it for the past 25 years. It is a win-win situation for the US lenders and US suppliers. Further expansion of business dealings on both sides will follow.
20. Political Benefits to US. With a few strokes of pen, President Bush eliminated a major Cold War irritant from the scene. India is not politically and diplomatically aligned with US as Europe is, but India as a strategic partner in ensuring safety of sea-lanes of the Indian Ocean is very valuable. At the moment as long as US stays in Iraq and Afghanistan, the world will perceive US as a big bully. A major regional power, with a different outlook than the European and the US is needed to cool the tempers off. India has to step in to prevent further sliding of the Middle East into anarchy.
21. Military Benefits to the US. US benefits immensely with India as a major military power. Forty percent of worlds' oil and commerce passes through the Indian Ocean sea-lanes. These today are unprotected. Pirates in the Red Sea and at the Malacca Straits prey on commerce. Indian cooperation will be helpful in keeping the sea-lanes free. Future military expansion in India to take up its role as a regional player bids well for the US military hardware suppliers. They will gain immensely over next 20 years. Another unstated benefit for US appears to be their assessment that India could be a counter weight to a “rising China” in the region. This is not the view of Indian policy makers who believe that a constructive engagement with China is more beneficial and not linked to any military or strategic relationship with USA.
22. Another example of emerging Indo-US co-operation is in the area of aerospace industry. Order for $8 Billion worth of commercial airplanes has been placed with Boeing of Seattle. Another big order for 125 military planes is on the way. US parliamentarians have to work these big business deals in their thinking prior their vote. The high tech manufacturing industry is at a take off stage in India. In last 3 months, announcements by big US companies totalling $7 billion dollars investment have been made. This has gone far beyond India's expectations. This sector together with IT services and BPO will power the US industry and businesses into higher profitability and help India accelerate its growth.
CHAPTER - VI
THE WAY AHEAD FOR ELECTRICAL ENERGY SECURITY
1. Looking at the potential economic growth and demand for energy for next two decades, India needs to take holistic view for its electrical energy security. All sources should be tapped to minimize the demand and supply gap. The following policies may be implemented by the government :- 
(a) Increased Utilization of Clean Coal Technology. The country is the third largest coal producer and holder of 7% of global reserves of coal. Coal provides 56% of India's commercial energy supply. Application of the coal gasification combined cycle process is an emerging technology for clean and efficient coal fueled generation.
(b) Shift to Next Generation Fuels and Increased Use of Renewable Sources of Energy. A possible way out could be to in meeting part of its energy requirements with renewable fuels and ease the pressure on electrical energy demand. India is probably the only country in the world with a full-fledged ministry dedicated to the production of energy from renewable energy sources. The Indian government is promoting the use of ethanol made from sugar cane and bio-diesel extracted from trees that are common in many parts of India, such as the Jetropha, Karanja and Mahua. Additionally, India is emerging as a growing market for solar, wind and hydroelectric power.
(c) Exploit this deal to the maximum extend for Nuclear Power Generation. The US position vis a vis Iran has become controversial due to Iran's alleged pursuance of a nuclear weapons programme. The Iran-India pipeline remains independent of the Indo-US nuclear deal. Given India's increasing demand for energy, India must look at every available option for energy procurement, including nuclear energy.
CHAPTER - VII
1. The turnaround is taking place. Dr R Chidambaram Former Chairman, Atomic Energy Commission, India said, "Today, India is the only developing country that has demonstrated its capability to design, build, operate and maintain nuclear power plants, manufacture all associated equipment and components and produce the required nuclear fuel and special materials”. The energy security is a pre requisite for economic growth of any nation and electrical energy is one of them. The generation of electricity from the nuclear energy not only requires the advance technology but also the guarantee for raw material like uranium. Same material and technology can be utilized for the development of nuclear weapon. The US wants the deal for business and strategic reasons. One can easily understand that India's Nuclear Development has been one amongst the many success stories of this country. But for importing Uranium which unfortunately India has not been endowed with, the entire process has been purely ‘Made in India'. Our visionary scientific community has more than proved their worth. However, we cannot get complacent and sit tight on our past laurels. As we have seen the gestation period between proving a technology in a test reactor and start commercial production and usage of that takes long. We are an energy guzzling nation. If we want to maintain our present growth rate of our GDP, and get our rightful place in today's world order, we must work to reach the finishing line of our three stage nuclear program quickly and start looking beyond that.
2. With global status comes global responsibility. India must utilize this opportunity to consolidate its position in international arena and become major player in the world. Since Pakistan is the only Islamic country that has a bomb, there could be demands from Muslim countries for Pakistan to be treated as an equal with India and for it to be given a similar deal. China, in its efforts to strengthen its friendship with Pakistan, in addition to creating a favourable influence among the Islamic countries, could opt for a similar deal with Pakistan. This should be avoided.
3. 123 agreement is a historic opportunity not so much because it will immediately solve all of our energy problems or make us a great power. It may do all that eventually, but what is more imp is that it will remove us from the ranks of a dubious minority whose only other members are Pakistan, North Korea and Israel. India can benefit tremendously from the deal. It would get us out of the hole
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