Why the Nuclear Deal is Bad for India?

July 03, 2008
BY Venkatesh Sridhar

For the past 2-3 weeks, there has been one issue that has dominated much of media attention in India. That singular issue is the Nuclear Deal between US and India. Now, everyone knows what I feel about the Left, but this time strangely I agree with them that India should not sign the deal as it is not in India’s interest to do so, though I have strong factual reasons to do so unlike the more ideologically bent opposition of the Left.

The reason why this post comes so late in the day – now that it’s almost a given that the Government of India (GoI) will go ahead with the deal despite the opposition to the deal by its coalition partner; the Left with the PM now officially going to the G8 meet, is because I have spent a lot of time in finding out information and framing a fact oriented opinion.

My opposition to this deal centers on the following grounds, questions which the media has not bothered raising and neither the opposition:

1. Shift of dependencies: Oil & Gas is a form of energy that is used worldwide in everything from agriculture to electricity generation. Oil is controlled by a cartel called OPEC. For nuclear energy creation, you need Uranium, India does not have enough Uranium resources so India needs this deal for access to Uranium. Now, that would mean being dependent on another cartel – the NSG – Nuclear Supplier’s Group. Will this provide energy self independence?

2. Why rely on another nation?: Do you know that another fission material that can be used for generation of Nuclear Energy is thorium, India has 24% of the world proven thorium reserves in the world. India is conducting cutting edge research on how to use thorium in producing nuclear energy. This research will lose its importance and significance when you are going to be getting the Uranium from somewhere else. Now, why should you spend strategic forex reserves outside of the country to benefit another nation. If India needs nuclear energy so much (India does need alternative forms of energy as India will be short of 412 gigawatts by 2050 and the need to import 1.6 billion tonnes of coal will be needed to fulfill this energy) then India can increase the allocation in the budget to thorium research and increase the strategic importance.


3. Minor benefits in the short term: India currently produces 4000 MWe of nuclear energy after this deal, it will rise to 20,000 MWe in a DECADE, yes in a DECADE. So, it is not a short term solution to the energy crisis in India. Also, construction of a nuclear reactor is a time consuming process.

4. Water usage in nuclear energy production: Nuclear energy, though considered one of the cleanest forms of energy, you require a lot more water – which is another resource that is depleting worldwide – for production and storage.

5. Strategically swallowing a bullet: Let’s get to strategic issues, as per the Hyde act as amended by both the Senate and the House of Representatives in the US (Bills: H.R. 5682 and S. 3709, a comparison of the two can be found here) and passed in the final version clearly dictates the following if you go through the congressional record S.11021 on November 16,2006:

i. India’s ties with Iran. As per Section 105 (8) of H.R. 5682 as passed by the Senate (with text of S. 3709 as engrossed amendment), Requires India’s full & active participation in U.S. and international efforts to dissuade, sanction, and contain Iran for its nuclear program consistent with U.N. Security Council resolutions (source). So, this puts us in a bind w.r.t to the Iran-Pakistan-India pipeline which will provide us with much needed cheap gas. Because, if construction begins in 2009, the gas can be supplied starting September 2012 (source). According to Jorge Hirsch – a physics professor at the University of Chicago, who initiated a letter to George Bush Jr., to prevent the US from adopting a hawkish stance towards Iran which will inevitably lead to use of Nuclear weapons against Iran – feels that unlike Russia and China, “India could indeed be bought off by US incentives like the nuclear deal, because its shortsighted leaders don’t recognize that they are committing national suicide by entering into this nuclear deal with the US.” (emphasis mine).

ii. In an event of a nuclear test by India, the US President will have the right to end the deal on the spot and demand return of the materials supplied and guess who wanted this clause in the bill – Senator Barrack Obama of Illinois and the presumptive Democrat Party nominee for the President of United States of America. From the congressional record S.11021 on November 16,2006, this is what Barrack Obama said:

Mr. OBAMA. On a related note, is it the chairman’s interpretation of the legislation that, in the event of a future nuclear test by the Government of India, nuclear power reactor fuel and equipment sales, and nuclear technology cooperation would terminate; other elements of the United States-India nuclear agreement would likely terminate; and the United States would have the right to demand the return of nuclear supplies? (emphasis mine)

Mr. LUGAR. Yes, under our bill, the only requirement which is waived is that in section 123.a(2) of the Atomic
Energy Act of 1954, for full-scope safeguards. India’s 123 agreement would still have to meet the requirement of section 123.a(4), which requires that in the event of a test by India of a nuclear
explosive device the United States shall have the right to request the return of supplies as you have stipulated. (emphasis mine)

Read it again, this is the Democratic Presumptive Nominee for the post of the President of the United States of America asking very clearly whether the US has the right to end this deal and ask for return of supplies if India does a nuclear test. Based on his question, what do you think he would do if he was the President and India does a nuclear test. Do not forget as of today he has a 50% chance of being the US president considering that only he and McCain are realistic candidates to be the President.

6. Lag in gaining benefits from this deal: India will have to wait for some years before it can actually get to use the Nuclear energy, I believe a reasonable time frame will be 5-10 years – considering that it involves going to so many governmental organizations, the NSG, the IAEA, the time it takes to construct additional nuclear reactors. Now, meanwhile our dependency will not reduce on Oil and Gas. Iran who has been a longtime friend of India. India and Iran have long cordial relations. India and Iran are talking with regards to a gas pipeline from Iran to India. The act of signing the deal means that India will have to forego this deal, read point 5(i). Period.

7. Economic costs: Commercially, the cost of producing Nuclear energy will be high considering the capital cost of setting up the Nuclear reactor, understand that you cannot produce electricity till the reactor is completely up which means the cost of production can vary anywhere between US$ 2,950/kWe to to a Moody’s Investors Service (read para 9 in the link) conservative estimate of between $5,000 and $6,000/kWe. According to a BusinessWeek report, “…,the [US] industry is aiming to build new plants for $1,500 to $2,000 per kilowatt of capacity,…”. However, they also added, “Trouble is, the cheapest plants built recently, all outside the U.S., have cost more than $2,000 per kilowatt.” For further information go to the wikipedia entry on economics of nuclear energy). There are a few costs no one is willing to factor in. Who will pay for the costs of ensuring compliance and the safeguards and all other reporting elements that are critical to the functioning of the deal after signing it. It is common sense that it will cost more.

8.Alternative energy creation: India has a stated goal of achieving energy independence by 2012, don’t see that happening with this deal for reasons explained above. India introduced the Jatropha incentives to encourage production of bio diesel using Jatropha seeds. Jatropha can grow in the wastelands. GoI has already identified 400,000 sq.km. of land where Jatropha can be grown. A much more prudent and truly long term solution to India’s energy crisis than the Nuclear deal, as India is a big consumer of diesel especially in rural areas.

9. Safety considerations: The world has already seen the impact of two major nuclear accidents, the famous Chernobyl disaster in former Soviet Union and current Ukraine and the Three Mile Island disaster in the US. Just as the Richter scale is used to measure the magnitude of Earthquakes, there is the International Nuclear Event Scale (INES). Chernobyl was rated 7, a non nuclear event that can be rated 7 is the Bhopal disaster in India and Third Mile was rated 5. Now, India’s nuclear reactors are close to two major cities in India – Mumbai (Tarapore) and Chennai (Kalpakkam), as the Chernobyl disaster The radioactive debris of the Chernobyl reactor covered an area more than 5,000 square kilometres. Imagine the damage it will cost if something goes wrong. Thank God, nothing has gone wrong so far, but still it should be an important consideration. India has not framed a Nuclear liability framework, what if something goes wrong, who will bear the brunt of clean up work, the economic cost and other such issues. We have not learnt our lessons from the Bhopal disaster as the clean up work continues to be stuck. Yet, the Government is silent on this issue.

Now, Dr. Manmohan Singh, may go right ahead and sign this deal, because he is hell bent on this deal as he views this as his personal stake being on the line plus this is the legacy he wants to leave behind, as he has nothing much to show as being the Prime Minister, except maybe be known as the most compromised Prime Minister.

Also, he has chosen a very good time – there is about 6 months left for the next General elections in February 2009, and even if his Government falls, it would take the Election Commission atleast 6 months to prepare itself for elections. As an economist he knows that India’s inflation problem – which will be a key poll issue cannot be solved in the 6 months timeframe without compromising serious growth, hence he has sensed his opportunity and decided to push for it regardless of the Left’s threat to withdraw support.

As I have outlined, overall it is not in our interests to go ahead with the deal and if the PM does sign the deal, the legacy he would leave behind will not be of securing India, a place as a Nuclear Weapon State but it will be of selling India’s nuclear independence.

Venkatesh ‘Venky’ Sridhar is a tech entrepreneur and currently is based out of Dubai, UAE where he leads a technology company as its CEO. Venky is from Mumbai, India. He writes about technology, politics and usually is very opinionated when it comes to current news and on things that he believes he adds a fresh or a different perspective. Venky’s blog can be found at


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