US, India finish nuclear reprocessing arrangements

WASHINGTON, March 29 (Reuters) - The United States and India moved a step closer on Monday to getting American firms a share of India's $150 billion nuclear energy market, completing negotiations on reprocessing spent nuclear fuel.

The agreement on procedures, announced by the State Department, will enable Indian reprocessing of U.S.-originated nuclear material under the International Atomic Energy Agency safeguards and is part of the countries' bilateral civilian atomic pact.

The 2008 U.S. deal ended the nuclear isolation India had experienced since its 1974 atomic test and gave it access to U.S. technology and fuel, while also opening up the global nuclear market to India.

Monday's announcement removed one hurdle to U.S. participation in the Indian nuclear market. However, a new cause for delay emerged on March 15, when opposition protests forced India's government to shelve a crucial accident liability bill.

The government backed off from introducing in parliament the bill to limit nuclear firms' liability in the case of industrial accidents after it became clear the opposition would block it. The legislation had been cleared by the cabinet.

Opposition parties seek to put a maximum liability of about $450 million on the state-run reactor operator without placing any compensation burden on private suppliers and contractors.

U.S. firms reluctant are to do business in India without legislation that underwrites their compensation liability in the case of industrial accidents.

India has offered to tender construction of two nuclear power plants, a business opportunity worth $10 billion, to U.S.-based firms such as General Electric Co and Westinghouse Electric Co, a subsidiary of Japan's Toshiba Corp .

But the liability issue has put U.S. firms at a competitive disadvantage over Russian and French firms whose accident liability is underwritten by their governments. The Russian and French have already been awarded contracts.

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