With Congress in his mind, Burns conveyed that he will consult and get back on the issue.

While both sides now look forward to the meeting between Prime Minister Manmohan Singh and US President George W Bush on the margins of the G-8 in Germany, it is clear that the entire agreement now hinges on the reprocessing issue.

Burns, who met the PM today, also received an invitation for US Secretary of State Condoleezza Rice from her counterpart Pranab Mukherjee. She is likely to visit India in the next couple of months.

It’s learnt that Washington was not in favour of a clear commitment on reprocessing in the agreement, but was willing to consider India’s reprocessing requirements at a time when the necessity arises. The thinking in the US camp was that India needs reprocessed fuel only around the time its fast-breeder reactors go critical.

Since this is still some years away, Burns took the view that this could be addressed later. The US side was willing to go to the extent that nothing in the 123 agreement would prevent this issue from being taken up in the future.

This, however, was rejected by India which recalled the Tarapur experience and made the point that the 123 agreement will be the template for all future cooperation and should contain all elements of what constitutes ‘full civilian nuclear cooperation’.

Sources said Burns understood the Indian point of view and discussed fresh ideas in his meetings with Shyam Saran, the Prime Minister’s special envoy on the N-deal, and Foreign Secretary Shiv Shankar Menon. In all these meetings, several ways were discussed through which both sides can resolve this matter without hurting the domestic constituency.

“We have managed to remove some of the issues that divided us, but some distance still remains to be covered... the agreement must reflect fully the statement in July 2005 and the one in March 2006,” said Menon after three days of what he described as “intense, productive and constructive” talks.

The US Embassy described the talks as “useful”, adding that “some progress” was achieved.

Burns is understood to have expressed doubt on whether Congress will vote positively on an agreement that grants India this “politically sensitive” right to reprocess.

India’s response was that the Hyde Act does not legally bind the Bush Administration to refusing India this right and since it is a policy decision, all effort must be made by the White House and the Department of State.

More so, New Delhi also pointed out that the July 18, 2006 joint statement promises “full” civil nuclear cooperation and without reprocessing rights, the US falls short of its commitment. Besides, as Menon recalled: “The US has said that nothing in the Hyde Act prevents them from meeting the commitments it made on July 18 and March 2.”

In this backdrop, Burns returned to Washington this evening with ideas worked upon jointly with his Indian counterparts. He is now expected to work the back channel with key Congressmen besides convincing White House to use its influence to see the conclusion of the agreement. “While there has been good cooperation, more work remains to be done to complete arrangements,” stated the US embassy.

Linked to this is also the issue of adequately “insulating” the US commitment in the March 2 Separation Plan on guarantee of lifetime supplies of fuel for Indian reactors from the clause in the agreement requiring the right to return of US-origin fuel and material in case India were to test a nuclear device.

On most other issues there is enough agreement though India is likely to hold back progress until US gives a clear commitment on reprocessing. While the US strategy is to go issue-by-issue, India is keen on keeping them interlinked so that there is no question of a halfway house. “We are closer and closer to be on the same page, but then these are all interlinked issues... we are optimistic that we will have an agreement, but I am not setting any deadlines,” said Menon.