Nuclear Deal --- Decoding the Mystery

Today India tryst with destiny would begin at the sanctum sanctorum of Parliament when members from wide political spectrum cast their vote either as pro deal or anti deal . It would be worthwhile to see how things have spanned out on this issue and most importantly what are the possible gains / losses with an eye on economics and markets



Power play :

July 2005 - Prime Minister Singh and US President George W Bush agree to a civilian nuclear co-operation deal

March 2006 - Two countries agree on India’s plan to separate its civilian and military nuclear reactors

Dec 2006 - US Congress approves the deal. Approvals from Nuclear Suppliers Group, International Atomic Energy Agency and a second time by the Congress are still needed

Dec 2006 - Bush signs the law approved by Congress, which makes changes to the US Atomic Energy Act

July 2007 - The two countries announce finalisation of the deal

Aug 2007 - Text of the bilateral pact, called the 123 agreement, is unveiled

Aug 2007 - Left parties slam the pact and ask the government to suspend it saying it compromises India’s sovereignty and imposes US influence

July 4, 2008- Samajwadi Party with 39 MPs agree to support the UPA on the deal

July 8, 2008 - Left withdraws support to the UPA; Govt approaches IAEA

July 22,2008 - Trust Vote on Nuclear Deal in Parliament

GAINS---> 1.It will help India meet its rising energy demands by reversing US sanctions, imposed after nuclear tests were carried out by India in 1974 and 1998.

2.India will get access to US civilian nuclear technology.

3.The deal guarantees Indian fuel supplies for its civilian programme, and allows it to re-process spent fuel.

4.It could spur India’s economic growth as India’s objective is to increase the production of nuclear power generation from its present capacity of 4,000 MW to 20,000 MW in the next decade.

5.It could usher in a new era of nuclear power in India, freeing the country from heavy dependence on fossil fuels.

LOSSES --->The deal ties India’s future foreign and energy policy closely to the US. India will now classify 14 of its 22 nuclear facilities as being for civilian use, and thus open to inspection.Further the fuel supply is limited till India doesnt conduct another test .

Decoding the nuke jargon ---

Nuclear Deal : A nuclear deal, announced in July, 2005 and finalised in March, 2006, would allow the United States to sell nuclear material to India and, in may end India’s nuclear isolation. India is self-sufficient in thorium but possesses a meagre 1% of the global uranium reserves. The deal will help India obtaining a steady supply of uranium required for running the present nuclear programme

123 agreement : Section 123 of the United States Atomic Energy Act of 1954, titled “Cooperation With Other Nations”, establishes an agreement for cooperation as a prerequisite for nuclear deals between the US and any other nation. Such an agreement is called a 123 Agreement

Hyde Act : Henry J Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006 is the legal framework for a bilateral pact between the United States and India under which the US will provide access to civil nuclear technology and access to nuclear fuel in exchange for International Atomic Energy Agency-safeguards on civilian Indian reactors

NPT : Signatories to the Nuclear Non-Proliferation Treaty (NPT) are granted access to civilian nuclear technology from each other as well as nuclear fuel via the Nuclear Suppliers Groups in exchange for International Atomic Energy Agency-verified compliance of the NPT tenets. India, Israel, and Pakistan, however, have not signed the NPT.

Political Play on Nuclear Deal :

One of the great things about Indian democracy is its combination of predictability and surprise. In its working, it is a bit like its wiser cousin the Bollywood of the last three decades. In an ordinary sense, it operates on stereotypes of corruption, banality and cynicism. The ordinary citizen almost despairs whether this system will ever change. He also realises that it is both open and venal, which in democratic terms may be more creative than a world that is aristocratic and closed. Such a politics begins with the simple assumption that there are no permanent enemies, just permanent interests. However, it goes beyond this Machiavellian premise to realise the difference between an adversary and an enemy. In politics, as political scientist Chantal Mouffe said, the man you battle with is not an enemy, someone you have to defeat, eliminate or exterminate. He is an adversary. Adversorial politics is more playful, more unpredictable. It is competitive but allows for negotiation, but it has the negotiability of the bazaar and not the market. It is not impersonal, it is based on old memories, it prefers the logic of coalitions, a win-win situation rather than a zero-sum game. It seeks system stability rather than regime crisis. Politics is based on continuous re-readings of the situation where text, pretext and context are convertible. For instance, you cannot quite figure out whether the nuclear deal will go through to solve a political issue in UP or vice versa.

Values, exaggerated to the extreme as ideology, may destabilise politics. In fact, the politics of non-negotiability is seen as anti-political. It is not that values are not important. It is just that they have to be articulated in the right way, at the right moment. They must not sound intractable or fundamentalist. It is not that people do not know the difference between good and bad, only they feel the necessity for their coexistence. It is a covert plea for the existence of multiple frames and viewpoints. One can personally grade or prioritise them but one has to allow for some notion of plurality. The politics of untouchability of groups or functions cannot threaten system stability. Electoral politics, in that sense, operates between the homeliness of the bazaar and the nation as home. One immediately asks two questions. What does this mean for the liberal market imagination? Secondly, what does it hold for the future of values? It is not an open domain where everything is for sale. It is a grid, a gradient where negotiation is possible, where the same good is valued differently, where personal benefits derive from public goods, but no one denies the necessity of the public good. It is here that values come in because even interests and deals need a framework of value, a sense of the bigger community. A nuclear deal is not passed as a nuclear deal. That would be too profane. A nuclear deal is an affirmation of national interests, of science, of our dignity as a nation

There is a bit of hypocrisy here but it is a hypocrisy which appeals to stability, which claims a loyalty if not an adherence to values. Of course, there is no debate about the essential qualities of nuclear energy. Sixty years of debates on history of the peace movements, the memoirs of the Pugwash moment, the Bulletin of the Atomic Scientists could be non-existent. Our politics is not contending that what it is good for GM, is good for the country, only that if the nuclear deal is good for the country, it may be good for the party. It is a lowest common denominator politics but within the democratic framework .

Nuclear Deal could benefit over 400 companies !

While the nuclear deal runs the risk of getting nuked, there exists a host of homegrown companies, which have a lot to gain from the controversial 123 Agreement. The pro-deal government has recommended a roadmap for meeting the country's energy requirement for the next 25 years and has set an ambitious target of 20,000 MWe (unit of nuclear power) by 2020 from the current 3,900 MWe. If all goes well, it will open up a sea of opportunities for various sectors involved in making equipment for nuclear power plants. India has plans to set up 15 plants over the next 20 years and so the pursuance with US to import more advanced nuclear power technology may better the standards of manufacturing for smaller players in future. India has a total installed power generation capacity of 1,44,564.97 MW. Out of this, 64.6% capacity is achieved through thermal fuel, and hydroelectric power contributes 10.5% while nuclear energy makes up for a mere 2.9%. Nuclear power is considered to be economically competitive at competitive tariffs. It is estimated that over 400 companies could get a chance to participate in building power plants directly or indirectly.

Among them is Bangalore-based Avasarla Technologies Ltd that's gearing up to increase its production capacity multi-fold, and also readying for a possible JV with a US-based technology group. Half of their product portfolio caters to nuclear power plants requirements. If this deal happens, they are expecting significant business orders once the government decides upon the agreement . The Rs 160-crore company has supplied coolant channel assembly, fuel transfer equipment, reactivity mechanisms and calandria—a vessel that holds the uranium in the reactor core—to some of the nuclear power plants in the past. Further, the company is also adding few more products like fuel missions, radiation shielding windows, plugs to meet future requirements.

Walchandnagar Industries-- The engineering major has supplied critical components like the calandria to most of the nuclear power plants in India. The company has been waiting for the government to decide upon the classification of the orders for supplying the parts.

Rajkot-based Kiwi Pumps is in full swing to talk with Walchandnagar Industries, L&T and BHEL for making spares and small components. The company has been exporting some casting parts to power equipment majors for the last few years

Hyderabad-based SEC Industries expects to scale it up to the volume and sophistication levels required by the plans that are going to come into operation post-deal. The company makes equipment for some of the most sophisticated weapons, including the Prithvi missile

Power plants also need construction companies, and players in this sector are expecting an array of big orders to erect nuclear power plants. HCC, which has executed four nuclear power plants in India and is working on another two, is hopeful of adding few more to its portfolio. Soon after the news of Left parties withdrawing their support, some top officials of the company had met government representatives. The company claims to have executed 60% of construction related work for in nuclear plants in India. Nuclear Power Corporation of India Ltd (NCPIL), too, supports the growth of small manufacturing players in this area. It's waiting for a working model between the US and India. US companies helping to set up the plants will be looking to work with Indian companies as the labour cost will be a third.

Shree Venkateshwara Engineering Industries, felt only too happy when the government decided to move ahead with the nuclear deal. This firm mostly manufactures various products for satellite launch vehicles and is now focusing on nuclear power plant equipment. Most power plants will supplement adequate power supply in the power-prone areas like AP and generate employment in smaller regions wherever it will be set up . The Rs 22 crore company is expecting to double its business in the next two years by bagging some orders from NCPIL. It has supplied coolant systems and main critical sub-assemblies to NCPIL.

As per industry sources, L&T is likely to get mainstream nuclear projects. However, BHEL is looking for a tie-up to manufacture equipment of up to 700 MW and 1,500 MW. NTPC is looking at setting up 2,000 MW nuclear plants and is in talks with GE Energy for technology and fuel. When all these major giants will celebrate on getting big orders, small players have enough reasons to rejoice too. There is an urgent need in India for capital to build its infrastructure and manufacturing base.

Steel players who have been witnessing a tough time on price-rise and exports ban for sometimes may expect a larger chunk of supply-orders from a nuclear power surge. Ahmedabad-based Suraj Stainless Steel supplies LP/HP heater tubes to major fabricators that are used in nuclear power plants, is all set for expansion. Suraj Stainless did Rs 191 crore in turnover last year

Rolta India has a substantial market share in engineering, safety design and project management services for nuclear power plants. The company expects to add few more projects after this deal. The government plans to spend $50-60 billion on upcoming power projects by 2020. The company expects to enhance their designing capacity in the years to come to meet the growing prospects in such projects.

The market capitalisation for smaller companies may go up at any point of time. As they are showing interest in working on bigger projects, chances are that they may see an upswing in their individual stock prices

At the end I would like to state it clearly that I'm a staunch supporter of this deal as this is the best that any goverment could get from USA . Never before has any american goverment bend so much to accomodate our interests . The oppponents to deal are doing a great disservice to nation by going hammer-and-tongs against it . The NDA gov which all along flaunted its proximity to the then USA regime at its time is now opposing the deal just for mere political gains , when the fact is that its very own security advisor Brijesh Mishra has come out in support of deal ! As for Left , they still live in Karl Marx-Lenin-Stalin era . Its an open secret that comrades are more loyal to China-Russia than they are to their own country . Its high time our political class does things that benefits India , things that ensure our energy security in times of impending global mayhem with regard to clean energy resources .