Proliferation Press

A webpage devoted to tracking and analyzing current events related to the proliferation of WMD/CBRN.

The US-India Nuclear Deal: What Is Gained

Posted by proliferationpresswm on September 16, 2008

Two articles detail the financial gains resulting from the soon-to-be approved nuclear deal between the United States and India. The precedent-breaking agreement makes India the first and only non-member of the Nuclear Nonproliferation Treaty (NPT) to legally engage in nuclear commerce.

The NPT, crafted in 1968, sought to limit nuclear proliferation and foster eventual nuclear disarmament by recognizing only five nuclear powers—United States, Russia, Britain, France and China. In return, other members were promised the technology-sharing and a commitment to nuclear disarmament. India considered the agreement discriminatory, and eventually detonated nuclear weapons in 1998 in response to Pakistan’s displayed its own nuclear-weapons capability.

The nuclear deal allows the US to provide fuel to India. But lifting the former nuclear moratorium on India also allows other nations—such as France, Russia and China to soon follow America’s lead.

The Irish Times brings focus to the rewards awaiting American weapons producers:

“Other than obvious commercial interests, which are important, the US is keen to invest militarily in India which it believes with Washington’s help and hardware can emerge as a counterweight to China’s growing might,” said retired Indian army lieutenant general VK Kapoor.

Washington is seeking a credible ally in a region where its hold is becoming tenuous. It is anxious for closer ties with India and equipment sales is a vital link in that chain, he added.

Over the next few months India is expected to acquire eight maritime reconnaissance aircraft from Boeing for more than $2 billion (€1.4 billion), varied equipment for its special forces and is considering the purchase of six additional Lockheed-Martin-built C 130J Hercules transport aircraft expected to cost about $1 billion.

Washington is also backing the $10 billion contract for 126 multi-role combat fighters for which Boeing and Lockheed Martin are competing alongside Russian and European manufacturers.

US companies are also bidding to supply India with more than 220 military helicopters to replace ageing platforms in contracts estimated at about $2 billion.

And the prospect of Delhi acquiring Patriot and Harpoon missiles was discussed during Indian defence minister AK Antony’s visit to Washington that ended at the weekend.

India is also expected to finalise negotiations with the US on the long-pending logistics support agreement that permits the two militaries reciprocal use of facilities for maintenance, servicing, communications, refuelling and medical care, bringing the two defence establishments closer.

Asia Times Online sheds light on the commercial impact of the deal:

Two years of heated, divisive debate on the nuclear deal also gave way to a buzz across the country on how much India stands to gain. The stock markets gained 3% as plans by India’s largest engineering firms such as Larsen & Toubro took a huge jump towards becoming reality. 

Over 400 Indian and foreign firms are expected to gain from the NSG waiver, according to leading industry bodies such as the Federation of Indian Chambers of Commerce and Industry. The 2020 goal for the country’s nuclear power generation industry requires a minimum investment of $45 billion, estimates the Associated Chambers of Commerce and Industry of India. 

While most of the new nuclear power plant deals are in the near future category, Larsen & Toubro has already struck a $750 million joint-venture deal this past July with the government-owned Nuclear Power Corporation of India Ltd (NPCIL) to manufacture forgings for nuclear power plants. 

Another engineering major, government-owned Bharat Heavy Electronics Ltd, and L&T are together expected to garner contracts worth $10 billion of the estimated $100 billion worth of deals over the next two decades. 

Mumbai-based NPCIL, which spearheads India’s nuclear power program, says it has 17 nuclear reactors in operation and five reactors under construction. 

The $1.2 billion GVK group, another leading infrastructure-developing Indian company, has plans to buy reactors and equipment from American companies such as General Electric and Westinghouse Electric. 

Such benifits may bring about tight and reinforcing bounds between the world’s largest democractic nations. But such gains will be weighed against future trends in nuclear weapon and energy proliferation. not to mention the response from Pakistan’s newly minted regime.

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