By Lea Terhune
Washington File Staff Writer

Washington – Implementation of the civil nuclear agreement between the United States and India would signify “an enormous increase in generating capacity that will help India meet its growing demand for electricity without relying on dirty, carbon-emitting coal, improving India’s economy and the lives of all Indians,” U.S. Ambassador to India David C. Mulford says.

Mulford outlined U.S. economic goals to delegates at the third Indo-U.S. Economic Summit in New Delhi on September 13.

Nuclear cooperation also would add to the expanding business transactions between the United States and India. “The U.S. is the largest Foreign Direct Investor in India, a considered bet on this country’s future. U.S. investment here continues to grow, and we want to accelerate it,” Mulford said, adding that the goal is “doubling Indo-U.S. trade in three years.”

The United States and India are building “an historic partnership,” and U.S. policy “is premised on the belief that no other relationship will be more important in shaping the world of the 21st century,” Mulford said.

The U.S.-India civil nuclear agreement calls for U.S. civil nuclear technology to be made available to India for generating domestic energy. This step is contingent on India’s designating some of its nuclear facilities for civilian use and opening them to International Atomic Energy Agency (IAEA) inspection, bringing it into the nuclear nonproliferation mainstream. India is not a signatory to the Nuclear Non-Proliferation Treaty. (See related article.)

“India’s isolation would end and it would be able to pioneer a new era for its energy needs,” Mulford said.  A change in U.S. law is needed to implement the agreement and congressional approval is necessary, a process that is under way. (See related article.)

The agreement also is dependent on the successful conclusion of negotiations on a bilateral agreement between India and the United States, the establishment of a safeguards agreement between India and the IAEA and a change in the rules of the Nuclear Suppliers Group to allow civil nuclear commerce with India.

Mulford also cited partnerships in information technology, services and manufacturing, which he said are seeing healthy growth and many business entities - not just multinational corporations - are involved.

“[T]here is a substantial body of capital waiting to be invested in India if the right conditions materialize,” Mulford said. Those conditions require a steady pace of economic reforms, which, he said, have lagged in recent months. He cautioned, “[T]here are serious economic costs to any loss of momentum on the reform front.” He said India is still among the most difficult countries in which to do business, ranked at 134 out of 176 by the World Bank.

To sustain India’s current strong economic growth, Mulford said, improvement is most critically needed in energy, infrastructure and agriculture. In addition to implementing the civil nuclear agreement, sharing technologies for clean coal, power transmission and electrical production could enhance India’s energy sector. Better roads, building standards, telecommunications and efficient delivery systems are essential. Also important are policies such as liberalization of financial institutions to enable greater foreign and domestic private-sector investment opportunities, market-sensitive regulatory regimes and better governance.

“The pace of future growth in India will hinge upon the continued sound economic policies of the Indian government and of those state governments who are seriously committed to attracting foreign trade and investment,” he said.

For more information on U.S. policies, see U.S.-India: Strengthening a Global Partnership.