UPDATE 2-U.S., India to sign civil nuclear deal on Friday

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By Arshad Mohammed

WASHINGTON, Oct 7 (Reuters) - The United States and India plan to sign a potentially lucrative agreement on Friday to open up nuclear trade between the two countries for the first time in three decades, sources familiar with the matter said.

The sources, who asked not to be named, said the agreement was due to be signed by U.S. Secretary of State Condoleezza Rice and Indian External Affairs Minister Pranab Mukherjee in Washington.

The pact will provide India with access to U.S. nuclear fuel, reactors and technology, overturning a ban on such trade instituted after India first conducted a nuclear test in 1974.

The India-U.S. deal could open up around $27 billion in investment in 18 to 20 nuclear plants in India over the next 15 years, according to the Confederation of Indian Industry.

President George W. Bush is scheduled to sign into law U.S. legislation that underpins the agreement on Wednesday, a week after the bill was ratified by the U.S. Congress over the objections of nonproliferation advocates.

The Bush administration believes the agreement will secure a strategic partnership with the world's largest democracy, help India meet its rising energy demand in an environmentally sound way and open up a civil nuclear market worth billions.

Critics argue the deal undermines efforts to prevent the spread of nuclear weapons and sets a precedent allowing other nations to seek to buy such technology without submitting to the full range of global nonproliferation safeguards.

The agreement has drawn criticism because India is not a party to the Non-Proliferation Treaty meant to stop the production and spread of nuclear weapons and a companion international agreement banning nuclear tests.

There is global competition for the business opportunities created by the deal.

France announced last week that it had signed a nuclear cooperation agreement with India, and Russia is already building two 1,000-megawatt reactors in the southern Indian state of Tamil Nadu.

Local media have reported that India's monopoly Nuclear Power Corp has tentatively picked four suppliers, including Westinghouse Electric and France's Areva, for planned new projects.

India has also been reported to be negotiating with General Electric, Japan's Hitachi Ltd and Russia's atomic energy agency Rosatom. (Editing by Mohammad Zargham)