Dear Sri Sangom Ji,
Let me post the core issues here with some articles I found useful. Please do not hesitate to shoot my ideas down - I will learn:
1. The treaty had it's genesis first with President Bush and PM Manmohan Singh agreeing on this Framework:
India has a huge need for energy and the fastest and the safest way is through rapid expansion of it's civil nuclear program. If India agrees to the IAEA regime, for her civil program (not military), then USA will ask the NSG(the suppliers) to lift the embargo in place for India. India still do not need to sign the NPT.
This was a huge gesture by President Bush, because he believed implicitly in India as a democracy (may be to contain china's influence in Asia), because I at least at that time knew that the lobby representing NPT was vehemently opposed to this. They felt that by giving India a pass, a precedence is being made and NPT will be violated, not signed by other countries. They pressured the Congress to make India sign the NPT, but the President prevailed - victory, India.
2. MM Singh Ji and Congress had to withstand a 'no confidence' vote because of the communists (they seem to not understand what is in the best interest of India). and got it approved. USA also passed it in congress (despite, I may add, a vigorous lobbying by the usual anti India forces - Pakistan for example).
3. India now passes a liability law not protecting the suppliers (the usual norm is that only the operators are exposed) with huge liabilities, that would bankrupt a small country (by the way, the standard internationally is that only the operators are liable), based on the same emotional issue you cited, on Union Carbide, where I still think that the Indian Government dropped the ball.
4. So, not surprisingly, private company suppliers, such as GE and Westinghouse, (Private companies in the USA have shareholder responsibilities and I do not think that their boards would let their management to expose the company to such huge liability risk) have balked. By the way since these US companies are supplied by a couple of Japanese private companies, I understand that PM MM Singh will be addressing Japanese concerns on this as well.
5. This is why, India's law will not take precedent, irrespective of counter claims. Either India signs the new international regime for liabilities or these companies truly will not supply. This not just about the US. Includes ALL private suppliers.
6. So, India has a choice - they can stand their ground on the law, and lose getting most of the supplier choices. Or they can sign the CSC, which is now signed by many (but ratified by 4).
7. My take on this - I do not think people in India understand how much the USA has done to make this technology available to India.
Please read:
India Weighs Measure to Ease Nuclear Liability Law - WSJ.com
India signs CSC on nuclear damages - The Economic Times
Nuclear Liability: A Continuing Impediment To Nuclear Commerce
Regarding the American weapons - that is a different topic altogether. I would only ask our folks to think through our enemies in the area, what their capabilities are and how best to counter it.
Regards,
KRS