By Mark Heinrich

VIENNA (Reuters) - Forty-five nations met on Thursday to consider lifting a ban on nuclear trade with India, a move which will help launch a U.S.-Indian nuclear deal.

A green light from the Nuclear Suppliers Group is needed for the deal to proceed to the U.S. Congress for final ratification.

But some member states and disarmament campaigners fear it could unravel the Non-Proliferation Treaty (NPT), which New Delhi has not joined.

Critics in the suppliers' group want to attach conditions to the U.S. proposal for the cartel to do business with India, including full U.N. inspections of Indian nuclear sites and no more nuclear test explosions.

A group waiver granting India access to nuclear fuel and technology markets would end a 34-year embargo imposed after it test-detonated a nuclear bomb with Western technology imported ostensibly to develop peaceful atomic energy.

New Delhi is one of only three nations not to have signed the non-proliferation treaty. It conducted another nuclear test in 1998 but is now observing a voluntary moratorium.

India says it expects to receive a "clean and unconditional" waiver. But U.S. legislation enacted in 2006 set conditions for commerce with India including no more test explosions.

This made it unlikely that the U.S. waiver to be discussed at the two-day meeting would pass without amendments, diplomats said. A second meeting is expected in early September to decide the extent of conditions.

"Some delegations gave approving statements but others expressed concerns expressed this morning, and conditions will be tabled this afternoon," a European diplomat told Reuters.

The Bush administration and major allies say the deal will shift India, the world's largest democracy, towards the treaty mainstream and combat global warming by fostering use of low-polluting nuclear energy in developing economies.

But supplier states are anxious to ensure that no items India imports for its civilian nuclear power program could "leak" into its atomic bomb sector.

Arms control groups say nuclear powers who favor the deal are keener to harvest its commercial and strategic benefits than to preserve rules against trade with treaty outsiders who bar comprehensive U.N. inspections.

CONDITIONS UNDER CONSIDERATION

Spearheading a drive for conditions on the exemption were a cluster of countries including New Zealand, Ireland, Austria, Switzerland and Norway.

The terms they wanted included an end to any waiver in the event of another bomb test; wider-ranging U.N. inspections of Indian sites; and no transfers of uranium-enrichment and reprocessing technologies with military applications.

These ideas are all enshrined in the 2006 U.S. Hyde Act. U.S. congressional leaders have signaled the deal will not be ratified unless the waiver text reflects the Hyde Act.

"An exemption for India would have severe consequences for the non-proliferation system," a Swiss Foreign Ministry spokesman said.

Apart from the United States, France, Britain, Russia, Canada, Brazil and South Africa appeared to be in favor of the deal, with others like China, Germany and Japan supportive in principle but more amenable to conditions, diplomats say.

India, which has a history of war and tension with neighboring nuclear rival Pakistan, insists on the right to carry out nuclear tests if national security requires them.

(additional reporting by Boris Groendahl and Karin Strohecker in Vienna, Alexander Thompson in Zurich; Editing by Angus MacSwan)