Indian Decade

India’s Nuclear Logjam

India’s nuclear liability laws are proving a headache for potential suppliers. And for U.S.-India co-operation.

While many have proclaimed a new era of friendship and partnership between India and the United States, significant challenges remain. One good example is over India’s civil nuclear liability law and specifically the rules relating to the Civil Liability for Nuclear Damage Act, which gives Indian nuclear plant operators the right to seek compensation from suppliers for a period of five years, and not for the entire lifetime of a nuclear reactor.

India’s nuclear liability laws were the focus of talks between Prime Minister Manmohan Singh and U.S. President Barack Obama on the sidelines of the Association of Southeast Asian Nations summit in Bali on November 18. Singh did a lot of explaining to Obama on the issue, telling him that India had “gone some way to responding to concerns of American companies and within the four corners of the law of the land, we are willing to address any specific grievances.” But the problem is that the Americans are unconvinced. 

Several global atomic energy companies have registered their protest against the tough Indian nuclear liability law. Indeed, following the passage of the law, some potential suppliers have raised concerns mainly relating to the application of the “operators’ right of recourse” as provided in Section 17. Minister of State in the Prime Minister’s Office V. Narayanasamy had told the Lok Sabha in August  that the government was aware of these difficulties, and was taking “necessary action to implement India’s nuclear energy program, including nuclear power projects in technical cooperation with other countries.”

India’s new rules effectively limit liability on foreign suppliers to less than $300 million, while time constraints are imposed on claimants seeking compensation. But companies like GE Hitachi Nuclear Energy and Westinghouse argue, not unjustifiably, that international norms put the onus on the operator of nuclear power plants to maintain safety, not the suppliers of equipment. The United States and many other countries have therefore been pressing India to bring its civil nuclear liability law in conformity with international conventions.

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Importantly, Singh has faced stiff opposition from all major opposition parties on the right and left over the prospect of diluting the nuclear liability laws, making changes nigh impossible. This means that the logjam will continue, and that as a result, there will be hardly any takers in the $100 billion Indian nuclear market.