But most importantly, the pessimist picture suffers from a selective marshaling of evidence. For example, the issue of liability notwithstanding, the interests of American nuclear firms are being advanced by the Indian government over other foreign suppliers. In fact, just before President Bush signed the Indo-U.S. civilian nuclear agreement into law, India promised to exclusively reserve approximately 10,000 MW of the nuclear reactor market for U.S. vendors. No such promises were made to other advanced nuclear technology powers. Similarly, by early 2009, two prominent locations in the industry friendly states of Gujarat and Andhra Pradesh had been reserved for the American companies Westinghouse and General Electric. As Saurav Jha rightly argues, India has only offered two dedicated locations for reactor development to American firms. Furthermore, earlier this year, U.S.-based Westinghouse and the Nuclear Power Corporation of India Limited signed an “Early Works Agreement” for setting up five nuclear reactors at Mithivadi in the state of Gujarat.
India’s nuclear liability law does indeed create an obstacle for U.S. firms. But it is more a result of India’s democratic processes and also, to a large extent, the changed perceptions of nuclear energy after the Fukushima crisis. In fact, when the law was initially proposed, the Indian government categorically rejected any liability claims against nuclear technology suppliers. However, the memories of the Bhopal Gas tragedy and the legitimacy crisis which unfolded after Fukushima would bind the hands of the Indian government. In any case, under Indian law the supplier’s liability is limited in both the dollar amount that can be incurred — U.S.$91 million — and the time frame companies can be held liable for. Moreover, given the sheer size of India’s nuclear energy market, any amount incurred from one plant is almost certainly to be made up for by the profits made on other plants. This is especially true given the stricter safety standards of modern generations of nuclear reactors. Indeed, it’s telling that as American companies balk at the nuclear liability law, other advanced nuclear exporters like France are eagerly entering India’s nuclear market.
Additionally, whatever economic benefits the U.S. hasn’t obtained from India’s nuclear industry pale in comparison to the enormous profits U.S. defense companies have reaped from sales to India. Despite India’s reservations about becoming too dependent on American military hardware, over the last seven years U.S. defense corporations have received more than U.S. $8 billion worth of contracts from India, increasingly displacing Russia as India’s preferred military supplier. This is occurring despite the enormous stipulations Washington places on arms contracts and the difficulty recipient nations often have in securing spare parts for their purchases over the entire course of the contract.
Strategically India and the U.S. have become extremely close. More than fifty joint defense exercises have taken place in the last seven years. Since 2005, India has supported all IAEA sanctions against Iran including those which reported it to the UN Security Council. India’s dependence on Iranian oil has also been reduced drastically, a fact that Hillary Clinton herself attested to recently.