Context: 

The US is working on measures to relax rules that have been limiting civil nuclear cooperation with India, as part of advancing the Indo-US nuclear deal. 

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• This move is meant to help India's nuclear institutions collaborate more easily with US companies.
• The US National Security Advisor has announced plans to remove probable Indian government organizations like: - Bhabha Atomic Research Centre (BARC), Indira Gandhi Atomic Research Centre (IGCAR), and Indian Rare Earths Limited (IREL) from the US entity list. 

What is the US Entity List?

• The US Entity List is a list of foreign individuals, businesses, and organizations that face export restrictions and licensing requirements for certain goods and technologies. 

It was created by the US Department of Commerce's Bureau of Industry and Security (BIS) to prevent trade that could:

• Support terrorism
• Aid Weapons of Mass Destruction (WMD) programs
• Harm US foreign policy or national security interests

Major Impediments for the deal:

Impediment from the US Side:

• The US “10CFR810” authorization under the Atomic Energy Act of 1954 allows US nuclear vendors to export equipment to India under strict safeguards, but it does not permit the manufacturing of nuclear equipment or performance of nuclear design work within India. 
• It hinders India’s desire to participate in the manufacturing value chain and co-produce components for joint nuclear projects.

Impediment from the Indian Side:

• India’s Civil Liability for Nuclear Damage Act, 2010, which establishes a mechanism for compensating victims of nuclear accidents, allocating liability, and specifying compensation procedures.
• The legislation channelises operators’ liability to equipment suppliers with foreign vendors like GE-Hitachi, Westinghouse, and Orano (formerly Areva) citing this as a reason for worries about investing in India’s nuclear sector due to fear of incurring future liability.

Possible areas of cooperation:

The US-India initiative on Critical and Emerging Technology (iCET):

• iCET can address concerns from both sides and pave the way for jointly manufacturing nuclear components for new atomic reactor projects in India, specifically through the deployment of American atomic reactors.

Collaboration in Light Water Reactors (LWRs): India mainly uses Pressurised Heavy Water Reactors (PHWRs) which are becoming outdated compared to the more modern Light Water Reactors (LWRs), which countries like the US, Russia, and France use.

• India could get access to advanced LWR technology under this nuclear deal thus addressing the efficiency challenges associated with current nuclear projects. 

Countering China: China is working on an ambitious plan to lead in the Small Modular Reactor (SMR) industry, unlike large reactors where it has been a latecomer.

• India wants to become a leader in manufacturing small nuclear reactors (30 MWe - 300 MWe), which are cheaper and more flexible than larger ones. 
• China sees SMRs as a tool for diplomatic outreach, particularly in the Global South.
• The US could benefit from India’s low-cost manufacturing sector thus helping India in competing and countering Chinese influence in the global nuclear market.