Australia has adopted a "wait and watch" policy and not yet made a decision on whether to block uranium sales to India by other countries of the 45-nation Nuclear Suppliers Group.
"The Government has not yet made a decision on whether to block uranium sales to India by other countries, an option open to Australia and members of the 45-nation Nuclear Suppliers Group, which sets global export controls for nuclear materials," spokesman of country's foreign Minister Stephen Smith was quoted as saying by the Australian media.
"The Government's position was one of 'wait and see'," the spokesman said.
Smith had announced, earlier this week, that Australia would not sell uranium to India unless it signed the NPT.
But analysts warned that Smith could risk upsetting India by reversing Howard government's decision last year to go ahead for uranium export agreement in light of the country's long-standing political stability and record as a responsible nuclear power.
This plays out in the shadow of a critical deal between the US and India to share civilian nuclear technology.
The so-called 123 agreement is mired in opposition in the Indian parliament, but analysts warned yesterday if the deal took off again, the Rudd Government's reversal on uranium sales could have "quite serious" ramifications for Australia- India relations.
"In the longer term, it could emerge as a source of friction between India and Australia. But that would only occur if the 123 agreement were to go ahead," said Sandy Gordon, a South Asia specialist with the University of Wollongong.