US has recently declassified documents pertaining to the Indian nuclear program around this time. Its an interesting read on the assessment of the US officials on why India went ahead with the nuke test. Check out the link to read the actual documents. The Nixon Administration and the Indian Nuclear Program, 1972-1974 U.S. Post-Mortem on 1974 Indian Test Criticized Intelligence Community Performance for "Waffling Judgments" and Not Following Up Leads Washington, D.C., December 5, 2011 â€“ India's "peaceful nuclear explosion" on 18 May 1974 caught the United States by surprise in part because the intelligence community had not been looking for signs that a test was in the works. According to a recently declassified Intelligence Community Staff post-mortem posted today by the National Security Archive and the Nuclear Proliferation International History Project, Nixon administration policymakers had given a relatively low priority to the Indian program and there was "no sense of urgency" to determine whether New Delhi was preparing to test a nuclear device. Intelligence "production" (analysis and reporting) on the topic "fell off" during the 20 months before the test, the analysis concluded. In early 1972, howeverâ€”two years before the testâ€”the State Department's Bureau of Intelligence and Research (INR) had predicted that India could make preparations for an underground test without detection by U.S. intelligence. Published for the first time today, the INR report warned that the U.S. government had given a "relatively modest priority to â€¦ relevant intelligence collection activities" which meant that a "concerted effort by India to conceal such preparations â€¦ may well succeed." The post-mortem [see document 21], the INR report [see document 2] and other new materials illustrate how intelligence priorities generally reflect the interests and priorities of top policymakers. The Nixon White House was focused on the Vietnam War and grand strategy toward Beijing and Moscow; intelligence on nuclear proliferation was a low priority. Compare, for example, the India case with that of Iraq during 2002-2003, when White House concerns encouragedâ€”some say even compelledâ€”intelligence producers to cherry pick raw information to demonstrate the development of WMD by the Saddam Hussein regime. INR prepared its India report at a time when secret sources were telling U.S. intelligence that New Delhi was about to test a nuclear device. The "small spate" of reports about a test had such "congruity, apparent reliability, and seeming credibility" that they prompted a review of India's nuclear intentions by INR and other government offices. In the end, government officials could not decide whether India had made a decision to test although a subsequent lead suggested otherwise. According to the intelligence community's post-mortem, obtained through a mandatory review appeal to the Interagency Security Classification Appeals Panel (ISCAP), one of the problems was that intelligence producers were not communicating with each other, so the "other guy" assumed that someone else was "primarily responsible for producing hard evidence of Indian intentions." The analysis was especially critical of an August 1972 Special National Intelligence Estimate for its "waffling judgments" on Indian nuclear intentions. Other declassified documents reproduced here from 1972 through 1974 illustrate the range of thinking on this sensitive topic: An INR report in February 1972 concluded that it could not "rule out a test" in the near future and it was "entirely possible that one or more nuclear devices have actually been fabricated and assembled." All the same, "it our judgment that a decision to authorize a test is unlikely in the next few months and may well be deferred for several years." During March and April 1972, Canadian and British intelligence concluded that they had no evidence that India had made a decision to test a nuclear device. Nevertheless, the Canadians believed that New Delhi could produce a device in less than a year. In June 1972, Japanese diplomat Ryohei Murata argued that the "Indians have decided to go ahead with a nuclear test" and that the Thar Desert in Rajasthan would be the test site. While basically correct, Murata's estimate was discounted because it did not represent an official Foreign Ministry view. Special National Intelligence Estimate (SNIE) 31-72 published in August 1972 also held that the Indians could produce a device "within a few days to a year of a decision to do so," but concluded that the chances that India had made a decision to test were "roughly even." In 1973, the Atomic Energy Commission's scientific representative in India told the U.S. consul in Bombay (Mumbai) that several "indications" suggested that India "may well have decided" to test a nuclear device. Five months before the test, the U.S. Embassy in New Delhi reported that the probability of an "early test" was at a "lower level than previous years." The rumors that India was going to test emerged in the wake of the South Asian crisis, when the Nixon White House tilted toward Pakistan, India's archrival. Relations between New Delhi and Washington were already cool during the Nixon administration which treated India as a relatively low priority. Henry Kissinger's secret trip to China underlined India's low priority by suggesting that if New Delhi ever faced a crisis with Beijing it could not count on Washington for help. Relations became truly frosty during the balance of 1971 when New Delhi signed a friendship treaty with Moscow and India and Pakistan went to war. Later Nixon and Kissinger wanted to improve the relationship, but India's nuclear intentions were not on their agenda. That India had refused to sign the Nuclear Nonproliferation Treaty was a non-issue for Nixon and Kissinger, who had little use for the NPT and treated nuclear proliferation as less than secondary. While the State Department cautioned India against nuclear tests in late 1970 [see document 6], concern did not rise to the top of policy hill. Whatever impact the events of 1971 may have had on India's decision to test a nuclear device that decision was soon to be made. According to George Perkovich, an authority on the Indian nuclear program at the Carnegie Endowment for International Peace, "it may be conjectured that support in principle for developing a nuclear explosive device was solidified by late 1971, that concentrated work on building the vital components began in spring 1972, and that formal prime ministerial approval to make final preparations for a PNE occurred in September 1972." In this context, the reports collected by U.S. intelligence in late 1971 and early 1972 about a possible test may have been good examples of the old chestnut that "where there's smoke, there's fire." Yet, the analysts who wrote SNIE 31-72 decided that the smoke had no significance because they saw only a 50-50 chance that New Delhi had made a decision to test (even though New Delhi was closing in on a decision).