The U.S. Congress on Wednesday approved a deal ending a three-decade ban on U.S. nuclear trade with India, unleashing billions of dollars of investment and drawing the world’s second most populous country closer to the West.

The Bush administration says the pact will secure a strategic partnership with the world’s largest democracy, help India meet its rising energy demand and open up a market worth billions.

While Delhi would place its non-military nuclear facilities under international safeguards, critics say the deal contains loopholes that could allow India to divert resources to its nuclear weapons programme.

Richard Lugar, the top Republican on the Senate foreign relations committee, said the deal cemented a “very important partnership for world peace”.

Congressional approval of the deal also signals an impressive resurrection for an agreement that on many occasions appeared on the verge of unravelling.

“The interesting thing is how many times it came close to death,” said Daryl Kimball, executive director of the Arms Control Association and strong critic of the agreement. “This was not an overwhelming slam dunk.”

To many in the Indian establishment, the deal signifies a triumph over decades of “nuclear apartheid” – during which India was denied access to foreign nuclear energy technology as punishment for testing nuclear weapons – that gives it rightful recognition as an acceptable nuclear weapons power. On a more practical level, many in business hope the deal will help India overcome its chronic power shortages, which are a major bottleneck to its economic aspirations.

With the global nuclear embargo on India already lifted, at Washington’s urging, by the recent decision of the Nuclear Suppliers Group, Areva, the French energy firm, is in talks with the Nuclear Power Corporation of India to sell it two nuclear reactors.

But even in India, the deal is not without its critics and the controversy over the deal, which had threatened the survival of the government of Manmohan Singh is unlikely to fade away.

India’s leftist parties – which withdrew their support from Mr Singh’s Congress-led coalition over the issue, prompting a major government crisis, remain staunchly opposed to an agreement that they believe subordinates New Delhi to US power, especially in foreign policy.

With Condoleezza Rice, the US Secretary of State, expected in New Delhi on Saturday to sign the deal, leftist parties have said they will observe “a black day against this surrender to US imperialism,” by hoisting black flags, and wearing black badges while the deal is signed.

And with elections due by the end of May, left parties have already said that they will give their support to any government willing to reverse the deal, suggesting that battles will continue even through the implementation phase.

Demetri Sevastopulo

India and Europe in civil nuclear accord

The European Union and India are to co-operate more closely on civil nuclear research and development as a way of strengthening a partnership that has often been seen as falling short of its potential.

Nicolas Sarkozy, France’s president, and Manmohan Singh, India’s prime minister, announced the agreement on Monday at an EU­-India summit that also produced promises of closer co-ordination of climate change and energy security policies.

The EU-Indian nuclear initiative followed a landmark vote last Saturday in the US House of Representatives that helped clear the way for India to buy nuclear power plants, technology and fuel in the US.

India, officially a nuclear weapons power since 1998, has been denied access to civilian nuclear technology for more than 30 years because of its test of a nuclear device in 1974 and its refusal to sign the 1968 Non-Proliferation Treaty.

Like the US administration, the EU takes the view that India, as a friendly democracy sharing many common values, should not be ostracised but encouraged to develop civilian nuclear energy and to assume its responsibilities as one of the world’s nuclear powers.

“France has confidence in India,” Mr Sarkozy said.

France, current holder of the EU presidency, is the member state with the most extensive experience of civilian nuclear power. It is keen to exploit the commercial opportunities presented by India’s need for new sources of energy to fuel its rapid economic expansion.

The US-Indian nuclear deal has been three years in the making and is on the brink of receiving final approval from the Senate.

By raising the bar for western strategic co-operation with India, the deal exposed Europe’s relatively low profile – trade issues aside – in New Delhi.

The EU and India said they planned to boost their joint work in the international thermonuclear experimental reactor (Iter) project, a French-based scheme to test environment-friendly, electricity-producing fusion power plants.

They also said they would sign a separate agreement between New Delhi and Euratom, the EU’s atomic energy agency, on fusion energy research.

However, the EU and India will be unable to conclude a trade accord by the end of this year, as once hoped, and remain at loggerheads on key issues in the Doha talks on liberalising world trade.

Mr Singh, noting that the EU-India summit had produced agreement on co-operation in clean coal technologies and solar energy, told reporters: “I am extremely satisfied . . . The holding of annual summits reflects the great importance both sides place on this strategic ­relationship.”

He said the EU and India had set themselves the goal of signing the trade deal by the end of 2009 and increasing total trade turnover to €100bn ($144bn, £80bn) five years from now. The 27 nation bloc’s trade with India amounted to just less than €56bn last year.

Tony Barber