What Bush actually said (from the Washington Post):
"Proliferation is certainly a concern and a part of our discussions and we've got a good-faith gesture by the Indian government that I'll be able to take to the Congress," Bush said. "But the other thing that our Congress has got to understand that it's in our economic interests that India have a civilian nuclear power industry to help take the pressure off the global demand for energy. ... To the extent that we can reduce demand for fossil fuels, it will reduce the cost to the American consumer."
There we have it: nonproliferation is a "concern" to Bush. However, not so important as low gas prices for American motorists.
One could imagine Rove having instructed Bush that such a message would go over well in the heartland. I don't think that this administration cares about US geopolitical stategy vis a vis China. I suspect that this too is just a lame justification. Like so many every other US foreign policy initiative of the past six years, I suspectthis one is also about enriching private interests closely associated with the Bush administration. This time they see they have a good shot at boosting US arms sales to India and Pakistan. One thing to keep in mind: Bush always delivers for his base.