NEW DELHI, 15 July 2007 — Keen to resolve contentious issues holding back the finalization of the Indo-US civilian nuclear deal, a high profile Indian team is heading for Washington today. Led by National Security Adviser M.K. Narayanan, the team is accompanied by Foreign Secretary Shiv Shankar Menon and Atomic Energy Commission Chairman Anil Kakodkar.

In Washington, the team will be joined by Indian envoy to US Ronen Sen and envoy to Singapore S. Jaishankar, who has been closely involved in nuclear negotiations, official sources said. The US team would be led by US National Security Adviser Stephen Hadley and Nicholas Burns.

The inclusion of Kakodkar in Indian delegation, according to analysts, is suggestive of New Delhi making a serious attempt to give a “final push” to the nuclear deal. In view of the tacit understanding that negotiations regarding the 123 agreement must be completed by July-end, the Washington talks are being viewed as extremely crucial. They are expected to resolve contentious issues such as India’s insistence on its right to reprocessing, nuclear testing and fuel guarantees.

Once finalized, the 123 agreement, ending the three-decade pause, will pave the way for resumption of nuclear commerce between India and US by the year-end, US Secretary of State Condoleeza Rice said recently. However, with both Indian and US officials here against setting any timeframe for finalization of “inherently complex negotiations,” it seems still too early to expect Washington talks to reach any major breakthrough.

India is hopeful of understanding the US reaction to a proposal New Delhi made last time. The proposal is on India setting up a stand-alone dedicated facility for reprocessing US-origin fuel. When India voiced this suggestion to US last month on sidelines of the G-8 summit in Germany, there was no reaction from Washington.

The forthcoming talks, giving India an idea of US stand on the issue, may “break the deadlock” over New Delhi’s demand for prior approval for reprocessing US-origin fuel, in keeping with the original July 18, 2005 understanding between the two countries, according to Indian officials.

With US Congress to be largely in recess in August, following which the country will be in full presidential mode, the 123 negotiations need to be finalized at the earliest possible. Displaying India’s keenness to push forward the long-stalled deal, Prime Minister Manmohan Singh spoke to US President George Bush on Wednesday.

Manmohan is keen on the controversial issues being settled before he leaves for US in September to attend the UN General Assembly, sources said. Chances of Rice coming to India next month are dependent on the mood set at talks in Washington. If some positive understanding is reached on 123, Manmohan may accept the invitation to visit Bush at his private ranch in Crawford, Texas, sources said.

The deal is also being held back because of India’s insistence on its right to test a nuclear device and its right to lifetime fuel guarantees for the 14 civil reactors it has agreed to place under international safeguards over next few years. US still doesn’t trust India on this, with critics in Washington asserting that possibility of New Delhi using the reprocessed fuel for weapons are too high.

Manmohan has assured legislators several times that the bilateral nuclear pact will conform to the July 18, 2005 understanding and the March 2, 2006 separation and it will not have any negative impact on India’s strategic deterrence and its three-stage indigenous thorium-based energy program. However, Bharatiya Janata Party, the main opposition party and the left bloc, external allies of the Congress-led United Progressive Alliance, have repeatedly demanded discussion of 123 pact in the Parliament. These parties are going to keep a close watch on negotiations in Washington.

India’s Offsets Policy a Challenge: US Official

India’s newly introduced offsets policy for defense purchases poses a challenge for America’s defense vendors, even as they await an Indian Air Force (IAF) order for 126 combat aircraft in a deal valued at $10 billion, a senior US military officer said yesterday, reports IANS.

“It will be a challenge (for the manufacturers) to put together a comprehensive and acceptable offsets plan within the Defense Procurement Procedure (DPP),” Lt. Gen. Jeffrey Kohler, director of the US Defense Security Cooperation Agency, told reporters here.

The DPP enunciated last year lays down that 30 percent of all defense deals valued at over Rs.3 billion have to be reinvested in the country. It also contains a transfer of technology (TOT) clause and mandates licensed production in India of military hardware bought from abroad. In clearing the IAF order last month, the Defense Ministry raised the offsets requirement to 50 percent.

According to Kohler, the issue was not so much the percentages but whether this also included the TOT element.