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By Y.P. Rajesh

NEW DELHI, Oct 30 (Reuters) - Indian Prime Minister Manmohan Singh said on Tuesday that a landmark but controversial nuclear energy deal with the United States had been delayed due to domestic opposition but was not dead.

His comments, following sustained U.S. pressure to push the historic deal, were the clearest in recent weeks over the fate of a pact many analysts say is close to collapse.

It aims to give India access to American nuclear fuel and equipment, reversing a three-decade ban, but has been opposed by Singh's communist allies who say it draws New Delhi into Washington's strategic embrace.

The deal has also been criticised by the non-proliferation lobby which says Washington was unfairly rewarding India, which has tested nuclear weapons and not signed the Non-Proliferation Treaty (NPT), sparking fears of a nuclear arms race in Asia.

The communists have threatened to end support to his coalition if the government pursues the agreement, forcing Singh to signal that he was pausing a deal that has been seen as the centrepiece of growing strategic ties between the two countries.

"There is some delay but we have not reached the end of the road," Singh said at a joint news conference with visiting German Chancellor Angela Merkel.

"We have run into some problems ... which we are trying to resolve," Singh said. "We remain committed that this process is carried forward."

India was a democracy and his government needed to take its supporters along with it, Singh said. He did not want to speculate what would happen if a consensus could not be found.

The government and the communist parties formed a panel in August to try and resolve the issue but have made little progress. A final meeting of the forum is due on Nov. 16 to draft its report.

U.S. PRESSURE

Some political analysts say that the government hopes to build a consensus through a debate over the deal in parliament when it opens next month. But few expect a breakthrough.

The deal needs the backing of the International Atomic Energy Agency and the Nuclear Suppliers Group of nations before it can be presented to the U.S. Congress for a final vote.

Washington is keen that this process is completed before the U.S. is swamped by the presidential and Congress election campaign next year.

On Tuesday, U.S. Treasury Secretary Henry Paulson had said in New Delhi that Indian approval of the deal would be seen positively by global business.

India has set itself a target of producing 20,000 megawatts (MW) of nuclear power by 2020, but the country's atomic energy department chief said on Tuesday it would fall short of the goal by 6,000 MW if the deal failed.

Supporters hope that the deal will give India much-needed uranium to power its reactors and lower dependency on coal, which accounts for nearly 41 percent of its energy needs and has become a focus of global worries over climate change. (Additional reporting by David Lawder in New Delhi and Krittivas Mukherjee in Mumbai)

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