One of the biggest irritants in Australia’s relationship with India has been over the sale of uranium. Australia has had a long-standing ban on uranium sales to non-NPT states (including India). John Howard briefly reversed this stance for India in 2007, a decision which was itself reversed following Labor’s election victory. India, unhappy that Australia is prepared to sell uranium to countries such as China (with a poor proliferation record) but not India (with a good non-proliferation record) has been placing significant pressure on Australia to reverse its stance. The ICND proposals, if endorsed by India, could potentially provide Kevin Rudd with useful political coverage in dealing with the ALP Left on what is, for them, a totemic issue.

However, for India the ability to purchase uranium from Australia is arguably more a symbolic than a practical issue given that and there is no shortage of countries lining up to supply it to India (Russia, Kazakhstan, Gabon, Mongolia and Canada to name a few).  No doubt, India would like to further diversify its suppliers, but in practical terms Australian uranium is not necessary for the expansion of India’s nuclear generation industry, at least for many years to come.

Of potentially greater significance for India is the political coverage the ICNND proposals could provide for Japan which, like Australia, refuses to supply nuclear technology to India because it is not an NPT state.  Japanese nuclear technology will be an important factor in India’s plans to install around 12-16 GW of additional nuclear generating capacity by 2020. Japan ranks third in installed nuclear capacity worldwide and Japanese companies (primarily Toshiba, Hitachi and Mitsubishi) rank among the biggest suppliers of nuclear technology, with Toshiba alone representing some 30 per cent of total worldwide nuclear reactor building capacity. Japanese companies are at the forefront of several nuclear technologies, including the utilization of advanced mixed oxide fuels and the construction of light water reactors, advanced boiled water reactors and fast breeder reactors, each of which India has hopes to deploy.  Japan is not absolutely essential to India’s plans for its civilian nuclear industry as India will still be able to access nuclear technology from the United States, France, Russia and South Korea among others. However, the absence of key Japanese technology would significantly restrict India’s options and may prevent India from achieving planned technology standards in developing India’s nuclear industry.

For several years, the Japanese nuclear industry with the support of the Ministry of Economy, Trade and Industry has been placing significant pressure on the government to allow Japanese companies to participate in India’s nuclear program. Toshiba has the ability to benefit indirectly from trade with India through the supply of US technology by its US subsidiary, Westinghouse. But Hitachi, which supplies complementary technology together with its US joint venture partner, GE, is effectively locked out and is said to be ‘desperate’ to be allowed to access the Indian market. However, the nuclear issue remains one of extreme domestic political sensitivity for Japan. According to one Japanese official, Japan’s decision to support India in the Nuclear Suppliers Group in 2008, ‘met much more opposition from the public than we anticipated’ and in October 2008 Japan reiterated its demand that India accede to the NPT (which it plainly cannot).

Like Australia, Japan has been looking for a key to unlock this door and allow Japan to participate in this lucrative market (as well as removing what could become a significant irritant in the Japan-India bilateral relationship). The ICNND proposals may well provide that political fig-leaf if Japan’s new government is willing to use it.