Australia’s government will push to lift a ban on uranium exports to India in an attempt to put its relationship with the rising Asian power on a new footing.

Julia Gillard, Australia’s prime minister, proposed on Tuesday a lifting of the boycott at next month’s ruling Labor party conference.

“As India rises and brings hundreds of millions of people out of poverty, it will need more energy. It is looking to supply 40 per cent of that energy need through nuclear energy, [and] we are a very big supplier of uranium,” said Ms Gillard.

“This will be one way we can take another step forward in our relationship with India.”

The Indian government welcomed the move. “We attach importance to our relations with Australia, which are growing across the board,” said S.M. Krishna, India’s foreign minister. “Energy is one of the key areas of bilateral cooperation.”

Despite some opposition, the Gillard proposal, a sharp break with existing government policy, is expected to be agreed.

Australia, which has nearly 40 per cent of known uranium reserves, prohibits the sale of the radioactive element to India because of New Delhi’s refusal to sign the Nuclear Non-Proliferation Treaty. That ban has been a sticking point in a relationship that the current government is keen to improve.

“[Ms Gillard] wants to engage India, and she knows that uranium is a barometer of trust in that relationship,” said Rory Medcalf, a former Australian diplomat in India. With the export ban in place, he said, “we’ve been saying we don’t trust them.”

Australia’s relationship with India has transformed over the past five years from one based on resources trade to a more strategic partnership.

Earlier this year, India signed a Comprehensive Economic Co-operation Agreement with Australia, calling it a “truly liberalising” pathway to closer integration between the two countries. Bilateral trade has expanded 30 per cent a year over the past five years and is expected to double within three years to $40bn.

A key importer of coal, copper and nickel, India is Australia’s third largest market after China and Japan.

“I see this announcement on India as part of the recognition that there is a new strategic reality out there,” said Martine Letts, a specialist in arms control and deputy director of international policy at the Sydney-based Lowy Institute for International Policy, with the government placing more emphasis on building relations with Asia’s rising powers and balancing between China and India.

India has been courting potential uranium suppliers since it clinched a historic deal in 2008 with the US, which dropped its nuclear sanctions, ending decades of isolation for India’s nuclear programme .

India has about 4,000 megawatts of installed nuclear power capacity, with another 2,600mw under construction. But its national energy plan calls for 30,000mw of nuclear power by 2020, 63,000mw by 2030 and 250,000mw by 2050. A planned nuclear power expansion has been stalled by a nuclear liability law that foreign power companies view as too punitive and this year’s Fukushima nuclear crisis in Japan.

If the Gillard measure is approved, it is likely to take a number of years to negotiate a bilateral agreement with India to regulate the use of the Australian uranium to ensure it is not diverted to military use.

The actual export of uranium to India will be contingent on the expansion of production in Australia, as current output is fully committed to existing customers, said Simon Clarke, a spokesman for the Australian Uranium Association, an industry body.

Additional reporting James Fontanella-Khan in Mumbai

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