INDIA remains a major future market for Australian uranium and may continue to negotiate supply contracts despite the breakdown of a key nuclear deal with the US.

American officials have extended the deadline to finalise its proposed nuclear co-operation deal with India after Prime Minister Manmohan Singh told President George W.Bush on Tuesday that New Delhi was having trouble implementing the agreement.

However, there was little optimism last night that an extended deadline would help salvage the deal, given the depth of opposition from Dr Singh's communist allies, and the unwillingness of his coalition Government to confront it.

The deal to expand India's nuclear power supply would have brought its reactors under the supervision of the International Atomic Energy Agency and was a precondition for a multi-million-dollar deal for Australian uranium exports.

Minerals Council of Australia chief executive Mitch Hooke said India remained a potential rather than actual export market for Australia, with most Australian exports going to Japan, the US and Europe.

"I don't see the fundamentals shifting," Mr Hooke told The Australian.

"I see this as just working through a political process and the Indians have made that plain themselves, that they have some domestic political considerations to take into account."

Resources Minister Ian Macfarlane said the Government had always insisted Australia would supply uranium to India only if effective, legally binding safeguards were in place.

Highly placed government sources in the Indian capital said that despite the impasse, the country's negotiators would continue seeking arrangements with countries such as Australia.

"With or without the deal with the US, we need uranium for our existing civilian nuclear power stations, and there can be no question but that we will go ahead in seeking to come to an agreement with Australia," one official said last night.

"Maybe, in view of all the controversy over the deal with the US, we will be very circumspect and quiet about it. But it would be foolish of us to do other than to seek uranium supplies for our existing nuclear resources as well as whatever comes up down the track in relation to the US deal."

India gets its uranium mainly from Russia, but is keen to expand its sources of supply and has been encouraged by the Howard Government's solid support.

Washington officials have signalled a subtle change in emphasis by delaying the completion of the agreement until next year.