Prime Minister Narendra Modi and his Japanese counterpart Shinzo Abe (r) make a toast during a banquet hosted by Abe at Abe’s official residence in Tokyo, Nov. 11. (Kiyoshi Ota/AFP/Getty Images)

Due to the ongoing demonetization process, a significant strategic breakthrough achieved by India has not received the kind of attention it deserves. In more normal circumstances, such a happening would have been the subject of far more dialogue that would look into the positive impact and benefits for India, writes Siddharth Srivastava. – @Siliconeer #Siliconeer #narendramodi @namo #namo #India #Japan #CivilNuclearDeal #ShinzoAbe #nuclearenergy

Ending years of negotiations, New Delhi and Tokyo have signed a bilateral civilian nuclear cooperation agreement that will enable Japan to supply India with fuel, equipment and technology for atomic power production. The accord was signed following a meeting between Prime Minister Narendra Modi and his Japanese counterpart Shinzo Abe. Modi flew to Tokyo just after announcing the demonetization decision.

The Nuclear Deal 

This is the first time Japan, the only country subjected to a nuclear attack, has signed such an agreement with a country that is not signatory to the Nuclear Non-proliferation Treaty (NPT). India refuses to sign the NPT as it considers the treaty to be discriminatory, favoring powerful countries such as America, Russia and China that already possess nuclear weapons and continue to stock pile more lethal arsenal. It has taken New Delhi some amount of persuasion to make Japan agree to sign the pact. A similar agreement was signed between India and USA in 2008, by then Prime Minister Manmohan Singh and President George Bush, heralding a new era of strategic, business and defense cooperation between the two countries.

The engagement has only deepened over the years underlined by the twin visits of President Barack Obama to India. New Delhi, however, has been much more accommodating and flexible with Tokyo by agreeing to a suspension clause in the event of a nuclear test. The Indo-Japan deal specifies that all atomic material supplied to India can be used only for peaceful purposes; a separate clause permits Japan to suspend the pact if India conducts a nuclear test. Modi described the signing of the agreement as “a historic step.” “The agreement is in line with Japan’s ambition to create a world without nuclear weapons,” said Abe, adding that India had made clear its intention to use atomic energy for peaceful purposes in September 2008 and also committed to a moratorium on any further nuclear tests.

China that has been opposing India’s entry into the Nuclear Supplier’s Group cautiously welcomed the deal. “We believe that under the promise of absorbing international obligation of nuclear non-proliferation, all countries are entitled to peaceful use of nuclear energy,” a Chinese foreign ministry spokesman said. However, now that the deal is done, it has the potential to open several new doors for India to push forward its atomic energy agenda.

“The present agreement would open up the door for collaboration between Indian and Japanese industries in our civil nuclear program,” the Indian foreign ministry said. India is targeting an exponential rise in nuclear power capacity to 63,000 MW by 2032. However, there is no way that the country can get close to target without getting Japan on board. Apart from Russian reactors, India plans to construct several nuclear power plants with the help of French and U.S. companies that depend on accessing parts from Japan. GE, Westinghouse, and Areva, major U.S. and French entities have substantial co-ownership by Japanese companies Hitachi, Toshiba and Mitsubishi, that are not allowed to do business with India without a nuclear agreement.

Finance Minister Arun Jaitley and MoS (IC) Power, Coal, New & Renewable Energy and Mines Piyush Goyal arrive for the BJP Parliamentary Party meeting in New Delhi, Nov. 29. (Atul Yadav/PTI)
Finance Minister Arun Jaitley and MoS (IC) Power, Coal, New & Renewable Energy and Mines Piyush Goyal arrive for the BJP Parliamentary Party meeting in New Delhi, Nov. 29. (Atul Yadav/PTI)

Power Focus

The nuclear deal again underlines the focus of the Modi government to push forward India’s generation sector by creating a healthy mix of thermal, nuclear and renewable power, including solar, wind and hydro. Some of the results are already beginning to show. In a written reply to the Lok Sabha, coal and power minister Piyush Goyal recently said that India has recorded overall power deficit of 0.7% in the first 7 months of the current fiscal, that is from April to October, with availability of 681.3 billion units, as against demand of 686 billion units. In 2015-16, this deficit was 2.1%.

Goyal further said against the peak power requirement of 1.59 GW, as much as 1.56 GW was available in April-October period, resulting in peak power deficit of 1.6%. In 2015-16, peak power deficit was 3.2%. New Delhi has set a target of generating 1,178 billion units with overall surplus of 1.1% and peak surplus of 2.6% for fiscal 2016-17.

However, there is still a long way to go. Goyal’s assertions needs to be read in the context of nearly 300 million people in India still without access to electricity from the grid. Also, financially strapped state-owned distribution companies or discoms, the crucial link between the consumer and generator, continue to struggle to buy power. Though a restructuring plan UDAY has been put in place to revive the discoms, it will take some time for the results to show. The civil nuclear agreement with Japan will no doubt be an important landmark in India’s quest to generate power for everybody.