End of the road for Indo-Japan nuclear deal?

The India-Japan civil nuclear deal might not fructify anytime too soon, with Prime Minister Manmohan Singh acknowledging that India was keenly aware of Japanese sensitivities on the matter and "would not like to force the issue".

Dr Singh was addressing a business luncheon attended by top leaders of business and industry from India and Japan in Tokyo on Monday.

"We would hope that Japan will be India's partner in the expansion of its civil nuclear industry for peaceful purposes. But I do recognise the sensitivity of the subject in Japan and will not therefore force the issue," he said, answering a question posed by Hideto Nakahara, executive vice president of global strategy and regional development at Mitsubishi Corporation, on the next steps of the completion of a Comprehensive Economic Partnership Agreement.

Reportage: Shishir Bhate in Tokyo

Dr Singh's remark gathers significance for two reasons: one, the statement appeared to be more an interjection in reply to a question that did not overtly have anything to do with nuclear energy; and two, he said it even before his scheduled meeting with Japanese Prime Minister Naoto Kan later in the evening.

Also, Dr Singh had expressed confidence in an interview with the Japanese media on Sunday when he said, "I am confident that we will be able to conclude an agreement on a civilian nuclear deal, which will be a win-win proposition for both of us."

However, Monday's remarks seem to pour cold water over the issue. This effectively means that both India and Japan will now have to go back to the drawing board and continue with the negotiations for a civil nuclear cooperation accord.

However, sources said that hasty conclusions must not be drawn from the prime minister's statement. They said that even though it appears that the deal might have been further delayed, it might be premature to slam the lid on it yet.

Sources said that both the nations would hold more rounds of negotiations on the civil nuclear issue and eventually some consensus could be arrived at.

Also, sources said that the intensifying protests in China against Japan, Beijing's belligerent power play and rising naval activity, and the security threat that Tokyo faces from North Korean missiles, might see Japan and India ironing out their differences on the nuclear issue.

The agreement, if it goes through, would help India get the technology for nuclear power generation from Japan. A fast-growing India's need for more energy is very acute and a lot hinges on the civil nuclear deal for New Delhi.

The two Asian nations have already had two rounds of negotiations on the civil nuclear agreement. New dates for further talks would be fixed through diplomatic channels.

Japan insists that India must commit to not conducting any nuclear tests and that should reflect in the proposed agreement.

India, on the other hand, maintains that its unilateral moratorium was unambiguously stated when its negotiations with other nations led to its inclusion in global civil nuclear trade.

Japan also wanted India to commit to signing the Comprehensive Test Ban Treaty.

The prime minister, meanwhile, welcomed the participation of Japanese industry in an energy-hungry India's nuclear industry.

He told Japanese business leaders that with India's rapid economic growth, the demand for energy has been rising rapidly.

"Japan, as a global leader in energy efficient technologies can play a significant role in helping us meet India's energy needs in an environmentally friendly manner.  We seek Japanese technology and investment in conventional as well as new and renewable energy," he said.

"Nuclear energy can provide our growing economy with a clean and efficient source of power.  Cooperation in this area will enable Japanese companies to participate in India's ambitious nuclear energy programme," he added.

Earlier, the prime minister told leaders of the Japanese industry that India's infrastructure deficit poses a major constraint on manufacturing growth and can adversely impact foreign direct investment flows.

He said that during India's next Five-Year Plan from 2012 to 2017, India envisages financial outlays of over $1 trillion on infrastructure projects.  Private investment will play a large role in achieving this target, but India would welcome a much greater role by Japanese industry in the development of economic infrastructure in India, he added.

The business luncheon that the prime minister addressed was attended by Hiromasa Yonekura, chairman, Nippon Keidanren, among other top Japanese CEOs.

The Indian business delegation was led by Reliance Industries chairman and managing director Mukesh Ambani; and also included Bharti Enterprises chairman Sunil Bharti Mittal; Fortis Healthcare chairman Malvinder Singh; HDFC Chairman Deepak Parekh and Moser Baer chairman Deepak Puri.