Oct. 12 (Bloomberg) -- India's Prime Minister Manmohan Singh indicated he's prepared to forego cooperation with the U.S. on nuclear energy to prevent the collapse of his government.

Singh said he hasn't ``given up hope'' on a 2005 agreement, which is opposed by Communist members of the ruling coalition. ``We are not a one-issue government,'' Singh, 75, said in New Delhi today at a conference.

``The nuclear deal with the U.S. is a good deal but failure on the deal won't be the end of life,'' he said.

The prime minister's comments signal he's prepared to allow the agreement, the centerpiece of renewed ties between the U.S. and India, to lapse. That may deny India access to the nuclear fuel and technology it wants to upgrade its reactors and step up electricity production in a country that faces a 13 percent shortage of power during peak hours.

``It seems that the left parties and the government have reached an understanding not to go ahead with the elections now and delay the nuclear accord,'' said N. Bhaskara Rao, chairman of the Centre For Media Studies, a policy research group in New Delhi. ``The failure to go ahead with the deal now would be a setback for the relations between'' India and the U.S.

The U.S. embassy's spokeswoman in New Delhi wasn't immediately available for comment.

U.S., India

The nuclear energy agreement process began when President George W. Bush and Prime Minister Singh agreed in July 2005 that U.S. companies would sell nuclear technology, opening a market for equipment, fuel and reactors from Fairfield, Connecticut- based General Electric Co. and Monroeville, Pennsylvania-based Westinghouse Electric Co.

The U.S. Congress in December last year passed legislation to allow the agreement to go forward, reversing decades of U.S. policy that barred nuclear exports to India after the South Asian country tested an atomic bomb in 1974 without signing the Non-Proliferation Treaty.

The plan has to clear further measures before becoming operational. India has to reach a safeguards agreement with the International Atomic Energy Agency, the United Nations' nuclear watchdog, for international inspections. The Nuclear Suppliers Group, a 45-nation forum dedicated to limiting the spread of atomic weapons, has to also approve the accord. The agreement then needs to be ratified by the U.S. Congress.

Foreign Policy

Singh's Communist allies oppose the nuclear accord on the grounds that it will weaken the nation's ability to follow an independent foreign policy and compromise the country's own scientific capability.

``It is certain that if the government goes ahead with the deal its communist allies will pull the plug,'' said Mahesh Rangarajan, an independent political observer. ``It remains to be seen how the situation will pan out in the coming days.''

The Communists want the agreement to be delayed until it's debated in parliament. They've also asked the government not to discuss safeguards for power plants with the International Atomic Energy Agency. The ruling coalition has formed a panel with the leftist parties to discuss the agreement. The panel is to meet next on Oct. 22

The leader of the Indian National Congress party, which heads the ruling federal coalition, also said she wasn't in favor of early elections.

The Congress party wasn't ``looking for confrontation'' with the Communists, Sonia Gandhi said at the same conference. The leftist parties weren't being ``unreasonable'' and talks were still on to build a consensus, she said.

Prime Minister Singh's government is set to complete its term of five years on May 2009.

``Elections are still far away,'' Singh said.

To contact the reporters on this story: Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net; Kartik Goyal in New Delhi at kgoyal@bloomberg.net.

Last Updated: October 12, 2007 04:28 EDT