Indian Decade

Nuclear Deal in Trouble?

The Indo-US nuclear deal doesn’t look like it’s going to be the boon US firms had hoped for.

It seems unlikely that US power reactor manufacturers will actually be able to benefit anytime soon from the Indo-US nuclear deal. At their insistence, and under pressure from the US government, India drafted a controversial nuclear liability bill capping compensation at Rs 500 crore ($107.8 million) and which made the operator (the Indian government) primarily, and the reactor suppliers (mostly US firms) secondarily liable in the event of a nuclear accident.

Following US objections, even the limited secondary liability of suppliers was to be diluted by deleting clause 17(b) of the proposed law. India’s Department of Atomic Energy (DAE) and industry representatives argued in favour of removing clause 17(b). The government of Manmohan Singh sent the bill to a Congress-controlled parliamentary committee to give additional respectability to the pro-US nuclear liability law.

But after the protests over the sentences handed down over the Bhopal gas tragedy snowballed across the country, the bill ran into trouble at the parliamentary committee stage. The entire opposition united to resist minimizing suppliers’ liability, and DAE Secretary Srikumar Banerjee had to apologize. Now the opposition hopes to have the compensation cap raised. Without liability protection, US reactor manufacturers won’t risk coming to India, which defeats at least part of the original purpose of the Indo-US nuclear deal.