India celebrated its admission to the world’s nuclear club yesterday after a decision by the 45 nations that legally supply atomic fuel and technology to lift a decades-old ban on nuclear trade with the country.

The Nuclear Suppliers’ Group (NSG) agreed on Saturday to waive its restrictions on India, even though it has not signed the Nuclear NonProliferation Treaty or the Comprehensive Test Ban Treaty, and tested nuclear weapons as recently as 1998.

The NSG was set up after India shocked the world by testing its first atomic device in 1974 and has prevented Delhi ever since from importing the nuclear material it needs to help to meet rocketing domestic energy demand.

India and the United States had lobbied hard for the waiver, which they need to activate a bilateral nuclear deal, struck in 2005, that allows India to import American nuclear supplies and is the cornerstone of a new strategic relationship between them.

However, the waiver also allows India to trade with all the other NSG members, even if the US deal fails to overcome its final obstacle – winning approval from the US Congress, ideally before the November presidential election.

Manmohan Singh, India’s Prime Minister, hailed the waiver as “a forward-looking and momentous decision”. He said: “It marks the end of India’s decades-long isolation from the nuclear mainstream. The opening of full civil nuclear cooperation between India and the international community will be good for India and for the world.”

Mr Singh and President Bush, both of whom see the nuclear deal as a major foreign policy triumph, spoke by telephone on Saturday to congratulate each other on the waiver.

Condoleezza Rice, the US Secretary of State, called the agreement a landmark and said that final congressional approval would be “a huge step for the US-India relationship.” David Miliband, the British Foreign Secretary, said that it had the potential “to make a significant contribution to energy and climate security” in India and worldwide.

The Confederation of Indian Industry said that it would create business opportunities worth about $30 billion (£17 billion) over the next 15 years, as India needs 18 to 20 more nuclear reactors on top of its current 22.

However, critics gave warning that the waiver could set a dangerous precedent that will hamper efforts to prevent other countries from developing nuclear weapons, especially North Korea and Iran. “The decision is a nonproliferation disaster of historic proportions that will produce harm for decades to come,” said Daryl Kimball, who heads the Washington-based Arms Control Association.

“Given India’s history of violating its peaceful nuclear use agreements to build nuclear weapons, India’s promises provide little confidence,” he said in a statement. The mayor of the Japanese city of Hiroshima, where the US dropped an atomic bomb for the first time on August 6, 1945, deplored the move.

“It is clear that this will make the NPT a dead letter and will become a huge obstacle for the future efforts toward complete abolition of nuclear weapons,” Tadatoshi Akiba said in a statement.

The waiver was also criticised in India, where opposition parties said that it would restrict military options and allow the US too much control over Indian foreign policy.

When the NSG began its negotiations on Thursday, more than a dozen nations, including China and Japan, were blocking the waiver, but their numbers soon dwindled to just three – Austria, Ireland and New Zealand. They gave in after India made verbal commitments on Friday to maintain a moratorium on nuclear weapons tests. The International Atomic Energy Agency signed off on the India-US nuclear deal last month.

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