Short of energy and uranium, and with an ambitious civil-nuclear program, India is hungry for imported uranium.
Given India has one of the world's lowest per capita rates of energy consumption and a high economic growth rate, the country has an urgent requirement for additional sources of ''clean'' energy in order to develop without contributing overly to global warming.
India is working hard to develop renewable energy sources, but these cannot cope with the rapid rise in demand. It is, therefore, burning increasing amounts of low-grade coal, which it has in abundance. In these circumstances, India regards nuclear energy as an important part of its future energy mix.
Australian uranium is not absolutely essential to India's civil nuclear program, because other countries such as Russia, France, and even China, would provide fuel should Australia refuse.
Burgeoning Australian sales on to world markets will have the general effect of loosening markets, even should Australia refuse to sell directly to India.
But India cannot understand why Australia has refused to sell to it, while agreeing to sell to China, given what India regards as China's somewhat dubious reputation on horizontal proliferation and its lack of democratic credentials. It regards sale of uranium as an ''earnest of intent'' in circumstances in which Australia has reiterated the importance of the relationship.
All that is not enough in itself to justify an Australian decision to sell, but it should be weighed up in the equation. Australia also needs to be mindful of counter-proliferation demands, and Labor needs to resolve some pressing internal issues in relation to nuclear energy.
As to the latter, it would have been a ''bridge too far'' for the Rudd Government to have agreed to sell uranium to India in an election environment and on the back of a decision to abandon the three-mines policy. Labor was also able to make electoral capital out of the Coalition's discomfiture on nuclear power and the ''not in my backyard'' syndrome. But those exigencies of the election campaign have now passed.
So the key issue becomes: would an Australian agreement to sell to India significantly undermine the non-proliferation regime?
Given the 54-member Nuclear Suppliers Group (which includes Australia) and the US itself would have agreed to free up India's civil nuclear program should current proposals proceed, it is difficult to see how an Australian holdout would make any difference in terms of proliferation, other than helping to keep Australia's credentials pure.
Should India be successfully inducted into the global civil-nuclear regime, we would have what would amount to a three-tier system one in which the N5 states (the US, Russia, the UK, France and China) would be at the top as ''legitimate'' nuclear weapons states; then would come India as a ''responsible'', but not fully legitimate, nuclear weapons state; and beneath that would be Pakistan and Israel.
This category of ''responsible'' nuclear weapons states would have all the normal strictures against horizontal proliferation applying to it, since its members would effectively have acceded to the IAEA non-proliferation regime.
Membership of the second tier would have the additional benefit of enhancing civil-nuclear safety regimes. This is an important issue for India, which cannot avoid constructing reactors near heavily populated areas, however, the existence of such a category could also be seen as an incentive to proliferate or at least as the removal of the existing disincentive built around the effective isolation from global civil nuclear trade.
There is also a wider argument concerning India's induction into the civil nuclear regime that goes beyond proliferation and greenhouse concerns.
India's rise as a responsible Asian power will greatly depend on the relationships it forges with the US and its allies such as Australia and Japan. An India left out of the civil nuclear regime would be less likely to support the current treaty regime and its objectives. And, given India's imminent rise as an important Asian strategic and economic power, this could have considerable impact on the regime itself.
So it makes sense for the Rudd Government to support India's induction into the global civil nuclear regime.
Dr Sandy Gordon is a visiting fellow with the Asia-Pacific College of Diplomacy at the ANU and author of India's Rise to Power.