In a paper circulated among members of the exclusive “Nuclear Suppliers Group”, the United States, which had committed to supporting India’s quest for membership to international non-proliferation regimes (namely the NSG, Australia Group, Wassenaar Arrangement and Missile Technology Control Regime or MTCR) has articulated a set of proposals to all  members for India’s accession. It appears that the US supports making an exception to accommodate India, rather than a wholesale change to the rules.

If this finds broader acceptance within the NSG, India’s entry could become easier, perhaps as early as the current plenary meeting which is ongoing now. Note the NSG was founded partly in response to India’ first nuclear test in 1974. India did not sign the Nuclear Non-Proliferation Treaty when it was first proposed and is not proposing to sign in now. This causes hesitation on the part of some NCG members.

What it means

Politically there are many implications to NSG membership for India and its impact on other potential applicants in the future and are discussed here. For business today, politics matters less but one major impact is that India would truly be eligible for two-way civil nuclear trade; NPCIL is eager to sell its 200 MW heavy water reactors to countries and locations that don’t need the full size 1000 MW reactors offered by GE/Westinghouse and others.

Too bad President Obama and his party aren’t running for elections in India next month. According to new data from the Pew Center, the United States enjoys a largely positive image in India. Nearly two-thirds (66%) express a favorable opinion of the U.S. By contrast, only 51% rate Russia favorably, and even fewer feel this way about the EU (36%) or China (34%).

U.S. President Barack Obama, who is scheduled to visit India and other Asian countries in November, is widely popular: 73% express confidence that Obama will do the right thing in world affairs.

USA as viewed by Indians

While many publics around the world continue to believe the U.S. acts unilaterally in world affairs, Indians see a more multilateral America. More than eight-in-ten (83%) say the U.S. takes the interests of countries like India into account when it makes foreign policy decisions — the highest percentage among the 21 nations surveyed outside the U.S. This view has become increasingly common among Indians over the last eight years — in 2002, only 51% said the U.S. considered their interests.

Using uranium fuel supplied by France’s Areva and Russia’s TVEL Corporation, three of India’s oldest atomic power stations have been able to recover from low capacity factors.

The General Electric-supplied Tarapur units 1 and 2 ran at 90 and 99 percent of capacity in the period from April to June 2010; they are both rated at just 160 megawatts each  and are over 40 years old. These units are located near Mumbai. Further north in desert of Rajasthan, the RAPS 2 unit produced at 97 percent of its 200 megawatt capacity in the same time frame.

All three reactors are under the IAEA safeguards regime which allows India to use imported uranium at plants where there is no potential of military application. Currently six Indian reactors  totalling to 1060 megawatts are under international safeguards and qualify for the use of imported uranium.

Areva is contracted to supply 300 ton for India’s existing Pressurised Heavy Water Reactors based on the “Candu” technology. TVEL Corporation is commited to 2,000 tons of uranium pellets in low-enriched form for use in Tarapur and in the new plants at Kudankulam, which use Russian VVER technology but are not operational yet.

The benefits to Russian and French companies are flowing from the American led movement to open up nuclear commerce with India, after sanctions were first imposed in 1974. Ironically American companies have yet to gain export permissions to sell anything to India.

Out of 5.1 million foreign tourists to enter India in 2009, about 800,000 were from the United States. The USA was also at the top of the list in 2008.

The next highest countries were the UK, BanglaDesh, Canada, Sri Lanka, France, followed by China with 97,000 arrivals.

In late 2010, India may get a spike from the hosting of the Commonwealth Games, so it is possible that the UK may “topple” the United States as the top sender of tourists to India.

Note: In the past many American business people  have traveled to India on tourist visas. The Indian government is now enforcing rules that have always been on the books insisting that visitors procure the right kind of visa for their travels. India expert recommends that you don’t travel for business on a tourist visa.

In recent posts, I have reported how India continues to grow at an unprecedented pace despite the global slowdown. Indian companies are leveraging this growth streak to strengthen their corporate portfolios, particularly by making outbound acquisitions in western markets.

In April-June 2010 quarter the number of acquisition transactions involving Indian companies was roughly the same as one year ago, 155. But the actual  dollar volume shot up 482 percent to $16.9 billion from just $3.5 billion a year ago. More important is the composition of those transactions: a year ago only 6 percent involved overseas partners but this shot up to over 50 percent in the last quarter.

Western executives need to watch this trend closely since India continues to forge a path distinct and different from other developing countries as its national wealth grows and as its companies become more ambitious globally.

The oil and gas sector produced about a third of the aggregate deal value during April–June 2010. The largest deal of the quarter was led by Indian public-sector companies  - Indian Oil Corporation, Oil and Natural Gas Corporation (jointly with Petroliam Nasional Bhd and Repsol) who acquired a 40% stake in Venezuela’s Empresa Mixta for $4.8 billion. Mumbai-based, Reliance Industries acquired an interest Marcellus shale deposits via Atlas Energy ($340 million) and via Pioneer & Pek LLC for Eagle Ford Shale ($266 million) in Pennsylvania and Texas respectively.  Other prominent transactions were Hinduja Group’s acquisition of Luxembourg-based  KBL European Private Bankers for $1.7 billion. The technology sector witnessed maximum activity with 22 deals, followed by industrial products (15 deals), financial services (14 deals), infrastructure (13 deals), and metals &mining (11 deals).