Russia, India edge closer to major nuclear deal

NEW DELHI Wed Feb 13, 2008 4:01am IST

Russia's Prime Minister Viktor Zubkov (L) shakes hands with his Indian counterpart Manmohan Singh during the signing of agreements ceremony in New Delhi February 12, 2008. Zubkov is on a two-day official visit to India. REUTERS/B Mathur

Russia's Prime Minister Viktor Zubkov (L) shakes hands with his Indian counterpart Manmohan Singh during the signing of agreements ceremony in New Delhi February 12, 2008. Zubkov is on a two-day official visit to India.

Credit: Reuters/B Mathur

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NEW DELHI (Reuters) - Russia and India on Tuesday edged closer to a multi-billion dollar nuclear deal to build four more reactors in southern India that has been delayed because of international restrictions against New Delhi.

The two states have been working for more than a year on a deal that will allow Russia build the reactors at the Kudankulam nuclear power plant in Tamil Nadu.

"An agreement on building additional reactors at the Kudankulam atomic station has been initialised," Deputy Prime Minister Alexander Zhukov told reporters in New Delhi.

Russia's atomic energy agency said the initialisation - which means officials agreed the final texts of the deal - had taken place on Feb 11, just before a visit to India by Prime Minister Viktor Zubkov.

The deal cannot be finalised because of restrictions on India imposed by the 45-nation Nuclear Suppliers Group (NSG) and the limits are unlikely to be lifted until a U.S.-India deal on civilian nuclear cooperation is ratified.

Russia is competing with the United States for influence in India, a Cold War ally of Moscow which the Kremlin sees as a growing partner in Asia.

Russia wants to double trade with India to $10 billion by 2010 to cement ties with one of the world's fastest growing major economies, Zubkov told reporters.

But trade with India lags far behind Moscow's key ties with the European Union - which accounts for more than half of Russia's foreign trade -- and China, with which Russia had more than $35 billion in trade last year.

NUCLEAR DEAL

The Kremlin, which controls the world's biggest gas reserves, is trying to boost nuclear sales abroad as high prices for fossil fuels make atomic power seem more attractive.

India, the world's second-fastest growing major economy, is trying to build new generation capacity to cope with soaring demand for energy.

But a controversial civilian nuclear deal with the United States -- the centrepiece of New Delhi's strategic relationship with Washington -- is on the rocks after it faced stiff opposition from the Indian government's communist allies.

The India-U.S. agreement -- if it were approved -- would allow New Delhi to access American nuclear fuel and reactors by overturning a three-decade ban imposed after India conducted a nuclear test while staying out of the Non-Proliferation Treaty.

"Russia is the only country currently building atomic stations in India," Russia's nuclear energy agency said in a statement.

Russia is building two 1,000 megawatt reactors at Kudankulam as part of a deal signed in 1988. Russia agreed in January that it intended to build four more reactors at the site.

Russian nuclear reactors cost up to $2 billion a piece but India would be expected to get a hefty discount on such a major deal, which cements Russia's nuclear cooperation.

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