An unobtrusive clause in a commercial agreement slated to be signed when Prime Minister Manmohan Singh meets U.S. President Barack Obama next week will determine whether American companies will start reaping the benefits of the Indo-U.S. nuclear agreement five years after Washington backed New Delhi’s case before the world community.

India had promised American companies contracts for setting up nuclear power plants in return for ending its nuclear isolation. Now, Nuclear Power Corporation of India Limited (NPCIL) and Westinghouse are to sign a commercial agreement that in theory will give the American company the go ahead to begin work on its nuclear power park in Gujarat. The atmospherics around the signing of the pact, on the day Dr. Singh and Mr. Obama meet at the White House, will be further improved with NPCIL asked to commit $100 million to $175 million as the first token payment.

But American companies will feel more assured if the NPCIL agrees to waive the “right of recourse” clause in case of an accident due to negligence by the supplier of the equipment.

The Indian limited liability legislation, said to be unique in the world in terms of holding equipment suppliers also accountable in case of a nuclear accident, has stymied plans by French and Russian nuclear companies as well.

The Central government sought legal opinion from the Attorney General G.E. Vahanvati as to whether NPCIL could waive the right of recourse. The AG felt that it was up to the NPCIL to have or not to have the clause.

The ball is presently in the NPCIL’s court, which is learnt to not be in favour of the other suggestion of committing $100 million to $175 million as payment either.

New Delhi has been keen to deliver its part of the bargain by the time the two principals meet in Washington. As Dr. Singh had said while returning from the St. Petersburg G20 summit that if India did certain concrete things by the time he visited U.S., there could be much improved capital flow from that part of the world.

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