India and Australia to Strengthen Ties through Long-Awaited Uranium Deal

September 8, 2014 Posted by India Briefing Reading Time: 3 minutes

MUMBAI – Australian PM Tony Abbott, who arrived in Mumbai last week, met with his Indian counterpart Narendra Modi during a two-day visit aimed at boosting trade. High on the agenda was the signing of a deal for Australian uranium, which makes up an estimated 40 percent of the world’s known reserves and is currently exported to China, Taiwan, Japan and the U.S.

Ramping up India’s meager nuclear power facilities was a top priority for Mr. Modi, whose Bharatiya Janata Party (BJP) won a landslide victory in May on promises of opening up Asia’s ailing third largest economy to foreign investment. The energy-starved giant has been facing difficulties meeting the demands of its vast and growing population, a quarter of which live with little to no electricity. The heavily coal-reliant nation, that also regularly suffers crippling blackouts, is thus keen to shift to nuclear energy.

Up until recently, however, Canberra has upheld a ban on uranium sales to India, a non-signatory of the Nuclear Non-Proliferation Treaty (NPT). Talks only began in 2012, following a landmark deal in 2008 between India and the United states, where the U.S. agreed to support India’s civil nuclear program without requiring that it give up its military nuclear program.

Mr. Abbott said he hoped to sign a deal by Friday, and Australian trade minister Andrew Robb made assurances that all necessary safeguards have been taken.

“The negotiations and work that’s gone on between authorities in India and Australia have gone on for some years to develop a bilateral nuclear cooperation agreement which meets the international requirements and we are satisfied, our officials are satisfied, that all the requirements have been met,” Mr. Robb told ABC radio.

India hopes to increase its Nuclear capacity to 63000 MW (up from 4780 MW) by 2032. This would involve the addition of a further 30 or so reactors at an estimated cost of US$ 85 billion.

India’s enormous potential for FDI has long been marred by its poor infrastructure, endemic corruption and outdated business and tax environments. But since the May election, Mr. Modi has repeatedly made good on his campaign promises of making India more business friendly. Now as the Asian giant tackles its energy problems, its prospects for investment are more attractive than ever.

To quote Mr. Abbott: “There is an abundance of opportunities here in India. I am determined to make the most of them.”

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