The U.S. administration has told India that Westinghouse Electric Co will emerge from bankruptcy and be sold by the year end, industry and diplomatic sources have said, raising the prospect of a Washington-supported sale or bailout for the nuclear firm. India, like other nuclear nations, has been closely watching the fate of Japanese-owned Westinghouse, which filed for Chapter 11 in March after an estimated $13 billion of cost overruns at two U.S. projects, casting a shadow over the nuclear industry.

There has been debate over potential U.S. support for the reactor maker since owner Toshiba, the laptop-to-chips conglomerate, announced the blow-out at Westinghouse last year. Some form of U.S. backing or involvement, industry experts say, could avoid a Chinese or Russian buyer unpalatable to Washington, which would prefer to keep Westinghouse's advanced nuclear technology out of the hands of its foreign rivals.

The White House declined comment.

"We were told that, by the end of the year, Westinghouse would really rework its situation and really be back in business," India's foreign secretary, Subrahmanyam Jaishankar, told a briefing, referring to an exit from bankruptcy.

Civil nuclear cooperation has been a cornerstone of U.S.-India relations, and the proposed construction of six Westinghouse AP1000 reactors in India's Andhra Pradesh, announced in 2016, crowned more than a decade of diplomatic efforts. The achievement was left in limbo by Westinghouse's troubles.

The project, however, found specific mention in the Indian government's joint communique from Prime Minister Narendra Modi's first meeting with President Donald Trump in Washington a week ago.

The two leaders "looked forward to conclusion of contractual agreements between Westinghouse Electric Company and the Nuclear Power Corporation of India for six nuclear reactors in India and also related project financing," the communique said.

Sources familiar with the matter said the statement was backed by U.S. guidance that Westinghouse would be sold to a U.S. investor after emerging from Chapter 11 proceedings, in turn paving the way to close the reactor deal in 2018.

Elaborating, one industry source with direct knowledge of Westinghouse's talks with India said: "Both sides are engaged and once Westinghouse comes out of bankruptcy we would look to conclude the contract." The source, who was not authorised to speak to media, requested anonymity.