US approves India nuclear deal -- Good for tech funds

December 13, 2006

On December 8, Congress approved the nuclear deal negotiated between the US and India in March 2006. The bill revokes the 1980 ban on selling US civil nuclear technology to India, even though India stil refuses to sign the nuclear Non-Proliferation Treaty (NPT). India will now allow IAEA inspections of 14 civilian nuclear facilities, but not its eight military reactors. India also agreed to continue its informal policy of non-proliferation and will not test another bomb.

What the US / India nuclear deal means:
The US had suspended trade with India in nuclear material since 1974, when India tested a nuclear bomb in violation of the NPT. Even though India has not signed the NPT treaty, it has not exported nuclear technology as much as China and Pakistan, both signatories to the treaty.

Some critics are concerned that the impact of the US signing such an agreement with a NPT non-signatory will, in effect, relegate the NPT to irrelevance, and spark another arms race. In fact, it will probably have no such effect, since the NPT has been ignored by so many for so long, anyway. However, it would conceivably make it more difficult for the US to censure China and Russia for supplying nuclear materials to Pakistan and Iran.

Others are concerned that shipments of nuclear fuel for peaceful purposes will free up India’s domestic nuclear fuel to be used for weapons.

What is of more importance is the increased clean energy that will result from the bill, reducing India’s dependence on foreign oil, specifically Russia and Iran.

Action steps:
Make sure you have an allocation of tech funds that include Indian companies as well as US nuclear technology companies. In time, this deal will improve the earnings of both.

Source: www.WhiteHouse.gov; China Daily Online News, “Bush hails Congress’ passage of nuclear deal with India”, December 10, 2006; Channel News Asia online, “Bush Welcomes US Congress approval of Indo-US nuclear deal”, December 10, 2006;