In 1955 Canada agreed to build the Canadian-Indian Reactor, U.S. or (CIRUS) in Trombay, India. This was a heavy-water moderated, light water cooled research reactor, modeled on the Canadian NRX reactor. This design uses natural uranium as fuel, because heavy water slows down neutrons enabling them to react with the small amounts of U235 in natural uranium. Canada agreed to supply half of the initial natural uranium with India using indigenously mined uranium for the rest. Also, in 1956, the U.S. agreed to supply India 18.9 metric tons of heavy water, which was used in this reactor.
In the mid 1950s, there was no such thing as safeguards. The IAEA was not established until 1957, and besides, partly due to the intervention of Homi Bhabha, the father of the Indian nuclear program (Perkovich 1999: 28), the proposal that fissionable materials be deposited with the agency and then only transferred to states under safeguards was rejected. Instead, the IAEA only applied safeguards to fissionable materials that were part of agency-aided projects. This meant that states could run parallel programs that were not subject to safeguards.
In 1961, India began construction of the Phoenix plutonium reprocessing plant in Trombay. In 1964, the first spent fuel from the CIRUS reactor was reprocessed in this plant, producing plutonium with a high proportion of Pu239 that could easily be made into a nuclear bomb (Perkovich 1999:64).
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George Perkovich 1999. India's Nuclear Bomb: The Impact on Global Proliferation, University of California Press.
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