INDIA celebrated another milestone in its quest for superpower status yesterday after the US Senate approved a Bill allowing US-Indian civilian nuclear co-operation for the first time in three decades.

Indian officials and experts said that the move cemented a new friendship between the world’s two biggest democracies, whose Cold War rivalry endured for much of the 1990s.

It paves the way for India to buy US nuclear reactors, fuel and technology to help to reduce its dependence on oil, while meeting the energy demands of its booming economy. It also, however, raises fears that India could use US technology to expand its nuclear arsenal, triggering an arms race with its two nuclear-armed neighbours, China and Pakistan.

Although the Senate and the House of Representatives have approved different versions of the Bill, the combined Congress must still vote on a final version in December. Pranab Mukherjee, the Indian Foreign Minister, said that the passage of the Bill by 85 votes to 12 on Thursday reflected the “very broad bipartisan support” for the deal.

He thanked President Bush for his support for the Bill, but added: “We must await the final version before drawing any conclusions on the legislation.” Sonia Gandhi, the leader of the ruling Congress party, said: “Of course we welcome it.” But she added that India would not accept anything short of the deal signed by President Bush and Manmohan Singh, the Indian Prime Minister, in Washington in July 2005.

The deal is the cornerstone of Washington’s new policy to support India’s emergence as a world power that can act with the US as a pillar of global security in the 21st century.

It was highly controversial because the US Atomic Energy Act bans all nuclear sales to countries that have not signed the nuclear Non-Proliferation Treaty, including India.

The Bill approved by the Senate carves out a legal exemption for India in exchange for Delhi allowing new safeguards and inspections at its 14 civilian nuclear plants. President Bush hailed the Bill’s passage, saying that it would bring India into the “non-proliferation mainstream”.

“As India’s economy continues to grow, this partnership will help India meet its energy needs without increasing air pollution and greenhouse gas emissions,” he said as he left Singapore for Vietnam.

Nuclear power accounts for about 3 per cent of India’s fuel needs but it hopes the figure will rise to at least 20 per cent within two decades.

Indian nuclear experts reacted with cautious optimism to the Senate vote.

The Nuclear Suppliers Group, the 45 countries that export nuclear material, still has to make an exception for India. Delhi must also negotiate a safeguard agreement with the UN nuclear watchdog, the International Atomic Energy Agency.

Another obstacle is that the versions of the Bill approved by the House and the Senate contain different language, notably on the sensitive issue of India’s nuclear co-operation with Iran.

India is thought to be unhappy with a Senate provision requiring President Bush to certify that India is “fully and actively” participating in efforts to contain Iran’s nuclear programme. US officials remain optimistic that the Bills can be reconciled and given final passage before the Republican-led Congress surrenders power to the Democrats in January.

“We are aware of the sensitivities in India, especially on reporting requirements,” said David C. Mulford, the US Ambassador to India. “I can assure you that the Administration will work towards resolving these issues when the reconciliation process takes place.”

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