Relations between the largest and oldest democracies have worsened considerably since President Donald Trump returned to the White House in January. Of late, they have gone from bad to worse. As the public exchange of blows intensifies, cooler minds should quickly advance solutions to stabilise relations. This is essential because both Washington and New Delhi benefit immensely from strong bilateral ties in an increasingly turbulent Indo-Pacific.
There are two possible ways to bring about some stability between the two Indo-Pacific democracies. One is for India, like a few Middle Eastern countries, to dangle possible investments in the United States or even offer personal gifts to the US President.
A second, better option consists of New Delhi working toward increasing its long-term business relationship with the United States. Plainly, New Delhi should make every effort to take India-US trade relations to the next level. Reports suggest that Indian officials are considering doing so, notably in the defence, fossil fuels, and nuclear energy sectors.
Focusing on the nuclear energy sector would be smart because it could very well pay lasting dividends for both India and the United States, in addition to helping mend their deteriorating bilateral relations.
The United States has long sought to engage in nuclear trade with India. In 2005, despite India’s non-signatory status to the Nuclear Nonproliferation Treaty (and thus despite considerable international resistance), Washington concluded a special agreement with New Delhi to open the way to nuclear trade with India. Implementation of the agreement encountered major challenges, however, and India’s 2010 Civil Liability for Nuclear Damage Act introduced strict supplier liability provisions that discouraged US firms from entering the Indian market.
Still, Washington has never given up on the hope that one day nuclear trade with India would materialise. Since the late 2000s, for example, the United States has been consistently active in supporting India’s bid to join the Nuclear Suppliers Group, an export control regime of 48 participating countries that aims to prevent nuclear proliferation by regulating the export of nuclear materials, equipment, and technology and setting global nuclear governance standards. This is significant because India is technically barred from joining the Nuclear Suppliers Group, which requires its participating countries to be signatories to the Nuclear Nonproliferation Treaty. The United States has thus been willing to support India’s membership bid, despite strong international pressure, and even after it appeared clear that the India-US nuclear agreement was dead in the water.
So, New Delhi should make moves in this area, and the timing is right to do so.
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A win-win situation
In the context of its commitment to scaling its nuclear capacity from 8.9 GW to 100 GW by 2047 to meet its growing energy needs and net-zero goals, New Delhi has already floated legal reforms to align with international norms, including the Convention on Supplementary Compensation. Not surprisingly, that hasn’t gone unnoticed in Washington. US officials have responded quickly and positively: they immediately eased export controls and endorsed new frameworks for cooperation with New Delhi.
In a joint statement in February, Indian Prime Minister Narendra Modi and Trump wasted no time and recommitted to “fully realise the US-India 123 Civil Nuclear Agreement by moving forward with plans to work together to build US-designed nuclear reactors in India through large-scale localisation and possible technology transfer.” That led, just a month later, to the approval of exports of small modular reactor technology by US-based Holtec International to India.
New Delhi should now speed up its legal reforms to facilitate the participation of foreign companies in its nuclear development efforts. It should also confirm that it wants to enable private companies to operate plants and allow phased foreign direct investment of up to 49 per cent, and it should do so while making clear to Washington that it is committed to developing a special, longtime relationship with the United States in that sector, and that it wants to build—and build fast—on recent progress.
To show its seriousness, New Delhi should immediately recommend risk-sharing mechanisms between Indian buyers and US suppliers, as well as technical exchanges between India’s Atomic Energy Regulatory Board and the US Nuclear Regulatory Commission to raise and harmonise safety standards. In the same vein, it should recommit to observing strict nonproliferation and nuclear security rules and norms, including that any US-origin nuclear material, equipment, or technology transferred to India will only be used for civilian purposes and not be sold, shared, or transferred to any country or entity without prior written US government approval.
New Delhi should also signal its openness to the United States launching pilot small modular reactor projects and fostering joint ventures in India to manufacture critical components. Indian companies, such as Adani or Tata, can serve as project developers for US-designed reactors, handling site development, permitting, and integration with India’s grid. New Delhi should emphasise the major “win-win” benefits of such moves, notably that India will obtain advanced US nuclear technology and that the United States will gain access to the vast Indian nuclear market, while lowering costs through local manufacturing.
Moreover, New Delhi should indicate that India-US cooperation should extend much farther, to include digital reactor controls, cybersecurity, and grid modernisation under the broader and recently concluded US-India Strategic Clean Energy Partnership.
Doing so is fully in line with Indian interests; it would help advance New Delhi’s ambitious nuclear development efforts. It is also squarely in US interests, as it would finally make US nuclear trade with India a feasible reality, twenty years after it was first attempted, unsuccessfully. That would also be personally satisfying to Trump, who, in May, signed four executive orders to promote a “nuclear renaissance,” which he sees as a linchpin of his energy, technological, and security strategy.
Finally, and significantly, a clear commitment to go in that direction has the potential to put a hard stop on the recent counterproductive downturn of India-US relations and lead to a return of good, thriving bilateral ties.
Going nuclear, plainly, could very well be the solution to many of the problems currently facing India-US relations. New Delhi should go down that path, fast.
Dr. David Santoro is President and CEO of Pacific Forum. Akhil Ramesh is Director of India Program and Economic Statecraft Initiative at Pacific Forum. Views are personal.
(Edited by Theres Sudeep)