India rushes to ready nuclear deal before Singh's U.S. trip

By Frank Jack Daniel and Matthias Williams

NEW DELHI (Reuters) - India is making a last-minute push to close a nuclear deal in time for a meeting between U.S. President Barack Obama and Prime Minister Manmohan Singh, who has made atomic energy cooperation with Washington a hallmark of his tenure.

Under the proposed deal, India would contract Toshiba's <6502.T> U.S. nuclear unit Westinghouse for preliminary works, including information sharing, a senior Indian official said. The aim is to build nuclear plants in the state of Gujarat.

"I think we're close," National Security Adviser Shivshankar Menon said on Friday. "I think they're hoping to do a pre-early works (agreement), which involves some transfer of proprietary information."

Singh is due to meet Obama in Washington on Sept 27.

Westinghouse were not immediately available for comment. After U.S. Secretary of State John Kerry raised the issue on a trip to India in June, the company said it expected the agreement to be finalised in September.

The value of the preliminary contract has not been revealed.

Indian officials say the proposed deal between Westinghouse and NPCIL would be the first time money is committed to a commercial U.S. nuclear supplier since Singh staked his career on a civil nuclear pact with U.S. President George W. Bush five years ago.

A commercial contract, however small, could breathe life into Singh's flagship policy as he nears the end of a decade in office amid grumbling in Washington that ties with India have failed to deliver rewards for U.S. businesses.

Many see the 2008 pact as Singh's crowning achievement, in one stroke ending years of isolation following atomic weapons tests in 1974 and 1998 and heralding a new era in the often fraught relations between the two democracies.

But on the nuclear front, progress has been slow because laws governing liability in the case of accidents took several years to finalise and when they came, put the onus on the equipment suppliers.

"Not just the U.S., ... Indian domestic suppliers, other foreign partners, all ask questions: how will this law work? How will it apply?" Menon said.

"They need to know in order to do business. We're in the process of addressing those questions, with them individually and as a whole, so that we ourselves also have clarity."

Rules drawn up in 2011 limit the liability of suppliers and were seen as softening the law.

The preliminary deal with Westinghouse would not involve putting in place nuclear equipment, so would not immediately brush up against the liability issue, Indian officials said.

Westinghouse has safety approval from U.S. nuclear authorities for the AP 1000 reactor it wants to sell India. The preliminary deal must be cleared by two Indian committees before Singh leaves for the United States on Wednesday, two Indian officials said, asking not to be named.

"The two governments have resolved government to government permissions and understandings necessary to enable commercial negotiations between NPCIL and Westinghouse," Menon said.

A third official said the Westinghouse deal would show foreign nuclear suppliers that India was committed to doing business with them.

"They want an assurance that they have a foothold in the country," said the official, who asked not to be named. "This has to be cleared before we go to America."

The last-minute dash for clearance has been criticized by Indian opposition parties, who accused the government of trying to bypass due process and water down the liability law.

After a TV station reported on Thursday that a note from the prime minister's office suggested skipping the approval of one committee to get the deal ready in time, the opposition Bharatiya Janata Party said the government wanted to "give a gift" to U.S. companies. India's Department of Atomic Energy issued a statement denying any shortcuts were being considered.

India aims to lift its nuclear capacity to 63,000 megawatts in the next 20 years by adding nearly 30 reactors. It currently operates 20 reactors at six sites with a capacity of 4,780 MW, or 2 percent of its total power capacity, according to NPCIL.

(Reporting by Frank Jack Daniel and Matthias Williams; Editing by Janet Lawrence)

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