Congress in December approved landmark legislation allowing US exports of civilian nuclear fuel and technology to India for the first time in 30 years, a move intended to reverse sanctions on the Asian giant for its nuclear tests.

But the operating agreement goes one step further, allowing India to reprocess spent fuel under safeguards by the global nuclear watchdog, the International Atomic Energy Agency (IAEA), said US Undersecretary of State Nicholas Burns, the US pointman in the talks to frame the pact.

That right to reprocess spent US-sourced nuclear fuel has been given only to Japan and the European Union so far, and US lawmakers had expressed skepticism over safeguards needed to deter India from possibly diverting any nuclear material to its military weapons program.

Burns said that India had to first establish a new national nuclear reprocessing facility under strict safeguards and then the two countries would agree on a set of arrangements and procedures for such activity.

India had given firm assurances that all nuclear material reprocessed would be used "only for peaceful purposes," Burns said.

Indian national security advisor M.K. Narayanan said the deal was not an opportunity for India to increase its nuclear arsenal.

"I think it's time certain countries overcame the belief that we are interested in proliferation," Narayanan said in New Delhi.

On the fate of the deal if India fires another nuclear weapons tests, Burns said the US Atomic Energy Act has made it clear that the US president could suspend the deal under such circumstances.

He agreed that the pact, known as the "123 agreement," would come under tight scrutiny in Congress when forwarded to the legislature for a vote possibly by the end of 2007. But he emphasized that all provisions were in line with US law.

"This is a very big step and Congress is going to look at it very carefully," he said.

Copies of the agreement have not been made public and US lawmakers said the administration was afraid of letting them read the document.

"I can only surmise that it includes provisions they fear will raise the hackles of Congress," said Edward Markey, co-chairman of the House of Representatives Bipartisan Task Force on Non-proliferation.

"Of course the administration will argue that they aren't breaking the law, but I think that folks up on the (Capitol) Hill have become increasingly skeptical of the administration's legal arguments," he said.

Markey was among 23 House lawmakers who sent a letter to Bush this week reminding him that "any inconsistencies" between the agreement and US laws "will call congressional approval deeply into doubt."

The United States would, under the pact, also support the creation of an "Indian strategic fuel reserve" and help India gain access to the international fuel market, Burns said, amid reports New Delhi wanted such a provision to guard against any supply cut-off due to nuclear testing.

"This language clearly contradicts the intent of the (US law), which was to cut off US assistance if India resumes testing and was not to help India build up a multi-year fuel supply," said Daryl Kimball, executive director of the US Arms Control Association.

The operating agreement took about two years to complete.

The "next steps" would include India's negotiation of a "safeguards" agreement with the IAEA and the deal gaining support in the 45-member Nuclear Suppliers Group, Rice and Mukherjee said in their joint statement.

"Once these additional actions have been completed, President Bush will submit the text of the agreement to the US Congress for final approval," they said.

The deal could open up a whopping 100 billion dollars in opportunities for American businesses, according to the US Chamber of Commerce.

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