Opposition leaders have slammed the government over the contentious Nuclear Liability Clause after the Cabinet Committee on Security (CCS) gave its clearance, paving way for signing of an agreement between Nuclear Power Corporation of India Ltd (NPCIL) and America's Westinghouse.
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 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.
The clearance has been criticized by Indian opposition parties, who accused the government of trying to bypass due process and water down the liability law.
Senior BJP leader Yashwant Sinha said on Wednesday: "The deal and the condition in the deal will be completely violated and illegal because they don't confirm to Indian laws. I don't know why the prime minister is so keen to go to US and sign this deal because it doesn't have anything for us. If the government itself starts to violate the law of the land then where is the hope?"
Singh is due to meet Obama in Washington on September 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.
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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.
However, a leader and national secretary of the Communist Party of India (CPI), D Raja, said that the government should not work against the national interest.
"Civilian nuclear liability is such a sensitive issue. On this government of India should not succumb and compromise our national interest," said Raja.
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.
Janata Dal (United) leader K C Tyagi said: "This shows that there is pressure from America. The nuclear deal is a shame and we along with the left parties had also opposed it. It is being done to please America and to promote economic growth of America."
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.
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.