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RUCNDT/USMISSION USUN NEW YORK PRIORITY 0092
RHMFISS/HQ USCENTCOM MACDILL AFB FL
RHHMUNA/HQ USPACOM HONOLULU HI

C O N F I D E N T I A L SECTION 01 OF 04 MUMBAI 000134 
 
SIPDIS 
 
SIPDIS 
 
DEPT. OF ENERGY FOR U/S GARMAN, S. JOHNSON, T. CUTLER, A. 
SCHEINEMAN 
DEPT. OF COMMERCE FOR U/S FRANK LAVIN 
 
E.O. 12958: DECL:  3/9/2017 
TAGS: ENRG SENV BEXP EFIN EINV EPET EMIN ETRD PREL
PGOV, IN 
SUBJECT: KAKODKAR GIVES POSITIVE HEARING TO U.S. INDUSTRY 
 
REF: 06 MUMBAI 2068 
 
MUMBAI 00000134  001.6 OF 004 
 
 
CLASSIFIED BY: Michael S. Owen, Consul General, Consulate 
General Mumbai, State. 
REASON: 1.4 (b), (d) 
 
 
 
 
Summary 
------- 
 
¶1. (C) DAE Secretary Anil Kakodkar made a strong positive 
impression on members of USIBC's nuclear trade delegation during 
their March 8 meeting in Mumbai.  In a briefing following the 
meeting, most delegation members told us that Kakodkar made 
compelling arguments to include reprocessing rights in the 123 
Agreement.  Several delegation members said they expected to 
encounter a rigid hardliner ultimately interested in diverting 
reprocessed fuel to India's strategic program, and were 
surprised by the eloquence and persuasiveness of Kakodkar's 
economic, energy security and technical arguments for 
reprocessing.  They said that his, and India's, views on 
reprocessing were still not fully understood and appreciated in 
Washington. Some said U.S. business would endeavor to better 
educate Congress, and indicated that the U.S. may, at some time, 
need to rethink its views on reprocessing rights in the 123 
Agreement.  GE's Tim Richards was careful not to advocate such a 
view, and said he would share a written readout of the meeting 
with Congress and the Administration in the coming days. 
USIBC's Ted Jones told us that his association sought to avoid a 
situation where India agreed to omit reprocessing from the 123 
Agreement but subsequently gave all its business to French and 
Russian firms that agreed to permit reprocessing.  Jones hinted 
that GE could use its political clout in Congress to stall any 
123 Agreement that would lead to such a scenario.  Kakodkar told 
GE and Westinghouse that "there was room for everybody" to get 
one of India's planned nuclear parks, but acknowledged, for the 
first time, that the Jaitapur site in southern Maharashtra would 
go to the French.   Mission continues to remind our industry 
interlocutors of the U.S. policy not to allow reprocessing at 
this stage of the negotiations, but Kakodkar has other ideas. 
End summary. 
 
Kakodkar:  Nuclear Cooperation Pointless Without Reprocessing 
Rights 
------------------- 
 
¶2. (SBU) The USIBC's delegation of U.S. nuclear companies met 
with DAE Secretary Anil Kakodkar on March 8 in Mumbai.  After 
the meeting the delegation gave us a readout of their 
discussions with Kakodkar.  The DAE Secretary told the 
delegation that civil nuclear cooperation with the U.S. made no 
sense for India without reprocessing rights.  The July 18th 
Joint Statement foresaw "full" civil nuclear cooperation.  For 
India, full cooperation had to include reprocessing.  Hence the 
draft 123 agreement put forth by the U.S. was a step backwards 
from the Joint Statement and unacceptable, the delegation quoted 
Kakodkar as saying. 
 
¶3. (SBU) Kakodkar used a prepared presentation to explain 
India's energy needs, the closed-fuel cycle and the need for 
reprocessing (Note: USIBC will share a copy of Kakodkar's 
presentation with the USG as soon as it receives it from the 
DAE.  End note).  Kakodkar justified the need for reprocessing 
by citing energy security needs and what he said was India's 
inability to store unlimited amounts of burnt fuel. 
 
¶4. (SBU) On energy security, Kakodkar outlined the expected 
dramatic growth in energy demand, recounted India's dependence 
 
MUMBAI 00000134  002.4 OF 004 
 
 
on fossil fuel imports, cited what he called the bad experience 
with the cutoff of fuel to Tarapur and explained the finite 
nature of India's reserves of natural uranium.  The closed fuel 
cycle and the DAE's three-stage vision were necessary if India 
was to meet its growing demand for power and achieve energy 
security, he said.  One delegation member told us that Kakodkar 
said India had about 40 years worth of fuel without resorting to 
reprocessed fuel.  With reprocessing and a complete three stage 
program, Kakodkar purportedly told the delegation, nuclear power 
could supply all of India's power needs for the next 500 years. 
(Comment: In other discussions, Kakodkar and others from DAE and 
the NPCIL have conceded that nuclear power will, at best, supply 
up to 25 percent of India's power over the longer term.  End 
comment).  Several members of the delegation told us that 
Kakodkar also made convincing technical justifications for the 
role of reprocessing in India's plans for a closed-fuel cycle. 
 
¶5. (SBU) Kakodkar also said that India could not keep storing 
spent fuel indefinitely.  If reprocessing was not an option, 
then India would accept an arrangement whereby the U.S. would 
take back any spent fuel, delegation members quoted Kakodkar as 
saying.  David Sloan of Nukem told us that Russia is prepared to 
take back spent fuel from India, but said U.S. industry 
acknowledged that such a policy was not an option for the U.S. 
Kakodkar said India was prepared to put all facilities that 
reprocess foreign-supplied fuel under IAEA safeguards.  He 
added, however, that this offer did not imply that India would 
safeguard all its reprocessing facilities.  Kakodkar was vague 
on the question of whether India would agree to safeguard the 
reactors that ultimately used reprocessed foreign-sourced fuel. 
 
Kakodkar's Arguments Impress Delegation 
--------------------------------------- 
 
¶6. (C) Kakodkar's presentation and his arguments for 
reprocessing made a positive impression on the delegation. 
Several of the delegation members told us they expected to meet 
a rigid hardliner who was really interested in reprocessing 
rights for military reasons.  Instead, they found a relaxed and 
articulate interlocutor who gave what they said were compelling 
arguments for reprocessing on economic, energy security and 
technical grounds. Several said that Kakodkar was far more 
relaxed and engaging than in his interaction with Commerce U/S 
Lavin and a handful of industry reps last year (reftel). 
 
¶7. (C) Kakodkar, and the broader Indian argument for 
reprocessing, may still be widely misunderstood in the U.S., we 
heard repeatedly from delegation members.  Many observers in the 
U.S., including in the Administration, Congress and the media, 
still believed that India insisted on reprocessing rights 
because it hoped to divert reprocessed fuel to its strategic 
program, we were told.  Many in Congress, in particular, were 
not getting the message that they had heard from Kakodkar in 
Mumbai, we heard repeatedly.  Several delegation members 
indicated that the time may come when the U.S. may need to 
rethink its views on reprocessing in the 123 Agreement, and said 
that U.S. business must do a better job of explaining India's 
views to Congress.  Graham Wisner of Patton Boggs, Vijay Sazawal 
of U.S. Enrichment Corporation and Phiroze Nagarvala of Bechtel 
spoke most openly in this direction. 
 
¶8. (C) Tim Richards, Director of International Energy Policy at 
General Electric, said he would share a readout and analysis of 
the group's meeting with Kakodkar for the USG.  Richards did not 
indicate that he shared the view that the U.S. must rethink its 
position, and said his paper would focus on reporting what the 
delegation had heard in Mumbai.  Ted Jones of USIBC told us that 
he saw two worst-case scenarios that his organization would work 
to avoid.  The first was a 123 Agreement with reprocessing 
 
MUMBAI 00000134  003.4 OF 004 
 
 
rights that was voted down by Congress, and the second was a 
situation where India consented to omit reprocessing rights in a 
123 Agreement but ultimately did not do business with U.S. 
companies, turning instead to countries like Russia and France 
that granted reprocessing rights.  While overall the USIBC had a 
broad agenda to support U.S. business to India, Jones said, the 
trade association's civil nuclear working group had clear views 
on nuclear cooperation with India:  It would support any 123 
Agreement that benefits U.S. nuclear companies in their efforts 
to do business with India.  Conversely, the working group will 
not support any 123 Agreement that effectively prevents U.S. 
companies from doing business with India, Jones told us openly. 
Jones confided his personal opinion that General Electric, while 
fully supporting the Administration's efforts to date, could opt 
to use "its tremendous political clout in Washington" to stall 
Congressional approval on any 123 Agreement that it feared would 
effectively bar it from doing business in India while creating 
an enabling environment for GE's French and Russian competitors. 
 
Kakodkar Seeks U.S. Industry Support 
------------------------------------ 
 
¶9. (C) Jones said Kakodkar approached him after the meeting to 
thank USIBC for its role in obtaining Congressional support for 
civil nuclear cooperation.  He told Jones that USIBC's work "was 
not yet done," and he asked USIBC's support "to mitigate the 
worst aspects" of the Hyde Act and the Administration's 123 
draft.  Wisner of Patton Boggs told us he invited Kakodkar to 
visit the U.S. to make his views better known in Washington. 
Kakodkar was non-committal and avoided a direct response to 
Wisner's invitation.  Others in the delegation supported the 
idea of a Kakodkar visit.  Consensus existed that the private 
sector, and not the USG, should invite Kakodkar, and that a trip 
should include significant interaction with the U.S. scientific 
community to ensure that Kakodkar's travel doesn't appear to be 
simply a lobbying effort.  Wisner speculated that Kakodkar would 
probably expect assurances that the USG would issue him a visa. 
 
Nuclear Parks:  French Will Get Jaitapur 
---------------------------------------- 
 
¶10. (SBU) India's plans to bundle foreign reactors in "nuclear 
parks" came up in the discussion with Kakodkar and in separate 
meetings that GE and Westinghouse had with Kakodkar and the 
NPCIL.  Kakodkar told both GE and Westinghouse separately that 
the DAE's growth plans were so significant "that there was place 
for everybody."  When asked, neither company said they were sure 
whether this meant that both GE and Westinghouse would get their 
own park.  Kakodkar spoke of four parks in his discussions with 
the companies.  Kudankulam in Tamil Nadu would go to the 
Russians, as had been announced during President Putin's recent 
visit to India.  Manmohan Bhagat, a consultant for Westinghouse, 
said Kakodkar confirmed that the Jaitapur site in southern 
Maharashtra would go to the French company Areva.  We were 
unable to get separate confirmation that this was in fact the 
case. (Comment: Until now, the NPCIL insisted that no decision 
had been made on Jaitapur, although the French had done previous 
work for NPCIL at the site.  End comment.)  If this were true, 
Bhagat said, Westinghouse would focus its efforts on obtaining 
the park planned for the Bhavnagar region of Gujarat on a site 
on the Orissa coastline.  NPCIL Chairman S.K. Jain said the U.S. 
companies could help his company get expedited regulatory 
approval for new sites if they could offer preliminary work like 
that which the French had performed in Jaitapur. 
 
U.S. Industry Can Also Benefit From India's Nuclear Know How 
--- 
 
¶11. (SBU) The delegation also gave us a readout of their 
 
MUMBAI 00000134  004.4 OF 004 
 
 
meetings with Indian firms, including Reliance Energy (which 
hosted the lunch event where Kakodkar made his presentation) and 
Larson and Toubro.  Jones said the delegation discovered that 
nuclear commerce with India could become a two-way street, with 
U.S. industry using India as a platform to support the expected 
renaissance of nuclear power in the U.S.  Mark Sheehan of the 
American Society of Mechanical Engineers (ASME) pointed out that 
India still used much of his group's technical standards for its 
power plants.  India adopted the standards when it imported the 
first two Tarapur reactors in the 1960s.  One large Indian 
supplier of the NPCIL was now applying for ASME certification in 
anticipation of marketing its hardware to the U.S. nuclear 
industry.  Sloan of Nukem said his company envisaged the 
establishment of fuel processing facilities in India to supply 
both the Indian market and third markets once the enabling 
environment is created. 
 
Comment 
------- 
 
¶12. (C) The openness, and even enthusiasm, for Kakodkar's 
arguments was clearly palatable among several members of the 
delegation.  We continue to remind our industry interlocutors of 
the U.S. policy not to allow reprocessing at this stage of the 
negotiations, but Kakodkar has other ideas. End comment. 
 
¶13. (U) Embassy New Delhi cleared this cable.OWEN