UPDATE 2-US proposes India nuclear waiver, approval in doubt

(Recasts with diplomats' comments)

By Boris Groendahl

VIENNA, Aug 14 (Reuters) - The United States has proposed to waive a ban on nuclear trade with India without conditions such as compliance with a nuclear test ban or U.N. inspections, but diplomats said on Thursday the draft was unlikely to pass.

The draft, circulated among members of the Nuclear Suppliers Group (NSG) and unveiled late on Wednesday by an arms control advocacy, will be discussed by the NSG next week in Vienna.

A green light by the 45-nation NSG, which operates by consensus, is necessary for the 2005 U.S.-India deal on nuclear trade to proceed to U.S. Congress for final ratification.

It would lift a 34-year embargo on nuclear trade for civilian purposes with the Asian atomic power, which has not signed the Non-Proliferation Treaty and has tested atomic bombs.

But diplomats from several NSG member states said the draft fell behind earlier U.S. proposals, had unacceptable clauses and omissions, and went against existing U.S. laws on the deal.

"I would be very surprised if that would happen," said a diplomat, who like the others, spoke on condition of anonymity.

"There are no conditions. Obviously what is missing is that (the waiver) is void if there is another atomic test."