As Japanese Prime Minister Yukio Hatoyama keeps his date for summit-level talks with India before the end of 2009, it is increasingly becoming clear that Japan would like India to restate its commitments over safeguarding imported civilian nuclear technology. This is so that Japanese private companies partnering American and French enterprises can push sales of their nuclear reactors to India.
Hatoyama today arrived in Mumbai on a three-day visit to India, where he is meeting top businessmen led by Ratan Tata, before flying to Delhi on Monday to meet Prime Minister Manmohan Singh. This is the first time any Japanese prime minister has touched down in Mumbai, an indication of Tokyo’s interest to promote bilateral economic relationship, although by all indications the Economic Partnership Agreement will not be finalised between the two sides.
Meanwhile, as India and the US remain locked in negotiations over their nuclear fuel reprocessing agreement, thereby forcing US companies to wait till the ink is dried before going ahead with their Indian deals, Japanese companies are said to be privately seeking assurances from the Hatoyama government over India’s civil nuclear energy plans before they finally give the green signal to their US and French partners.
Sources said Hatoyama would like India to restate its commitments that all imported civilian nuclear technology would not be transferred to any other parties, including sub-contractors, except back to the original importer.
Japan would also wait for Parliament to pass the Nuclear Liability Bill, officials confirmed, which limited the damages and compensation in case of a nuclear accident. The Bill, said to be limiting damages to $450 million, was supposed to be passed in this winter session of Parliament, but has now been delayed.
“Perhaps Prime Minister Manmohan Singh can reassure the Japanese PM, as he has done with other nations, emphasising that the Japanese civil nuclear companies could also help in the production of clean energy, which would help India combat climate change,” the sources said.
Fact is, the two US companies pushing to build nuclear reactors in India, General Electric and Westinghouse Electric Company (WEC), are either partly or wholly owned by Japanese companies. GE and Hitachi came together in a 60:40 per cent international joint venture in 2006, while Toshiba Corporation bought WEC outright in 2006 for $4 billion.
Moreover, in December 2008, Japan’s Mitsubishi Nuclear Fuel Company was restructured as a comprehensive nuclear fuel fabrication company, with 30 per cent stake by the French firm Areva, so as to allow it to expand domestic operations in overseas markets.
In pursuance of the landmark signature of the Indo-US nuclear deal in December 2008, US companies were allotted two sites in Gujarat and Andhra Pradesh to build reactors, while the French were allotted one site in Jaitapur, Maharashtra. (The Russians have been given Haripur in West Bengal to build their reactors, besides expanding the site at Kudankulam in Tamil Nadu.)
The US companies are still awaiting clearance from the Department of Energy, which in turn is awaiting a final signature on the Indo-US nuclear fuel processing agreement. The companies are hoping for a quick resolution of negotiations as they eye a conservative $100 billion market for nuclear trade in India.
The US companies are nervous that if the Obama administration doesn’t quickly sign on the dotted line, the French and the Russians could run away with a sizeable chunk of the Indian market.
Meanwhile, the Hatoyama government, dependent on two small parties on the left and the right to remain in power, could come under increasing pressure from its coalition partners on the Indian nuclear issue, always an extremely testy and sensitive area of debate in a population that has first-hand experienced the horrors of nuclear war.
Hatoyama, whose Democratic Party came to power a few months ago, ending the Liberal Democratic Party’s 55-year reign, survived a major scare earlier in the month, when its coalition partners tried to push him to infuse much more cash into the economy.
Hatoyama comes to Delhi after balancing his budget, one key reason for the late trip to India.
For the record, Manmohan Singh told former Japanese PM Taro Aso during his visit to Tokyo last year that India would wait for Japan “to set its own pace” on lifting all formal and informal bans on high technology trade with India. Aso’s government did India a huge favour the same year when, as a member of the Nuclear Suppliers Group, it did not stand in the way of the lifting of the civil nuclear trade ban on India.
Meanwhile, GE Hitachi Nuclear Energy, which announced plans to build a nuclear power plant earlier this month, said as much as 70 per cent of the plant’s components could be manufactured in India, including reactor castings, forgings and piping, not only to lower costs, but also making India an export hub for Europe. Preliminary agreements with Bharat Heavy Electricals Limited and Larsen & Toubro have already been signed. If US approvals come through, GE Hitachi plans to start work, along with the Nuclear Power Corporation of India, by 2012, which would let it start producing power by 2018.
L&T has already signed a memorandum of understanding with WEC to build components for its nuclear power plants in India. Areva is in joint venture talks with Bharat Forge Ltd, the largest global maker of automotive forgings, to manufacture pressurised heavy water reactors.
India has a nuclear power generating capacity of 4120 Mw, but hopes to increase production to 20,000 Mw by 2020 and 50-60,000 Mw by 2032.
