NEW DELHI (Reuters) - China became the latest nation to line up for a stake in India’s civil nuclear energy drive on Thursday, agreeing to open talks on cooperation in a sector that New Delhi sees as the solution to its chronic power problems.
A deal for India to buy nuclear reactors from Beijing could be years away, but Chinese President Xi Jinping’s agreement to explore options means his country may now be competing with the United States, France, Russia and several others.
“I think the Chinese are looking basically at the commercial angle, since India is going to be giving contracts for nearly $150 billion in the next 10-15 years,” said Srikanth Kondapalli, a China watcher at Delhi’s Jawaharlal Nehru University.
The announcement, made after Xi met Prime Minister Narendra Modi in New Delhi, comes on the heels of a deal India struck earlier this month to buy uranium from Australia to increase its fuel supplies.
Days before that, Modi and Japanese Prime Minister Shinzo Abe agreed to accelerate talks on a nuclear energy pact.
Nuclear power, which currently accounts for just 3 percent of India’s output, is key to future energy plans in India, where a quarter of the 1.2 billion population has little or no access to electricity.
India operates 20 mostly small reactors at six sites with a capacity of 4,780 MW, according to the Nuclear Power Corporation of India Limited. The government hopes to increase its nuclear capacity to 63,000 MW by 2032 by adding nearly 30 reactors at an estimated cost of $85 billion.
The talks with China will be a further boost to India’s bid for international acceptance as a nuclear power producer even though it has not signed the nuclear non-proliferation treaty.
India faced sanctions after testing nuclear weapons in 1998, but the restrictions have eroded since a 2008 U.S. deal that recognized its growing economic weight as well as safeguards against diversion of civilian fuel for military purposes.
It now has nuclear energy agreements with about a dozen countries and imports uranium from France, Russia and Kazakhstan.
“It’s a way for India to explore other options,” said W.P.S. Sidhu, a senior fellow at Brookings India, on the agreement between New Delhi and Beijing to open talks.
Since the pact with Washington, which allowed India to import nuclear fuel and technology without giving up its military program, Toshiba’s U.S. nuclear unit Westinghouse has been looking to build a nuclear power plant in the western Indian state of Gujarat.
But getting foreign players up and running in India’s nuclear power sector has been largely elusive due to disagreements over pricing and a liability law that suppliers worry leaves them overexposed in the event of an accident.
“There are ways of being flexible, but the companies have to decide to move ahead,” an Indian official said.
He said talks with Russia to build two units at the Kudankulam nuclear power project in southern India, which had been deadlocked, moved forward in March “within the parameters of the liability law”.
“India is open for business,” he said. “The aim is to resolve any issues that need to be ironed out.”
Broader nuclear cooperation in Asia has in the past been hampered by geopolitical tensions, said Rajiv Nayan, a senior research associate at the Institute for Defense Studies and Analyses in New Delhi.
The U.S.-India deal irked both Pakistan, India’s nuclear-armed neighbor, and China, which saw it as an attempt by Washington to counteract Beijing’s growing influence in the region.
Last year, China committed $6.5 billion to finance the construction of two nuclear reactors in Pakistan’s port city of Karachi, and the two nations are in conversation about building three more plants, according to a Pakistani official.
Reporting by Krista Mahr; Additional reporting by Frank Jack Daniel in NEW DELHI, Ben Blanchard in BEIJING and Mehreen Zahra-Malik in ISLAMABAD; Editing by John Chalmers