Context: US National Security Advisor Jake Sullivan revealed that efforts are underway to eliminate long-standing regulations that have obstructed nuclear collaboration between India’s leading nuclear organizations and American firms.
What are the legal barriers hindering India’s participation in nuclear manufacturing?
• 10CFR810 Authorization: This regulation, part of the US Atomic Energy Act of 1954, limits American nuclear vendors from engaging in nuclear equipment manufacturing or design activities in India. While it permits the export of equipment under strict safeguards, it restricts India from participating in the manufacturing value chain or co-producing components for nuclear power projects.
• Civil Liability for Nuclear Damage Act, 2010:This Indian law outlines a compensation framework for victims of nuclear accidents and places liability on equipment suppliers. This provision raises apprehensions among foreign companies like GE-Hitachi and Westinghouse about potential financial risks, discouraging investment in India’s nuclear energy sector.
How does Indian liability law impact the Indo-US nuclear deal?
• The Civil Liability for Nuclear Damage Act, 2010, establishes a framework where nuclear operators are held strictly liable for damages caused by nuclear incidents. Operators are responsible for compensation, which is limited to ₹500 crore (around USD 60 million), with the central government assuming liability for additional amounts up to 300 million Special Drawing Rights (SDRs) in the case of more significant damages.
• The Act also grants operators the right of recourse against suppliers, meaning they can seek compensation from suppliers if they bear costs due to an accident. However, this right is not mandatory, serving as an enabling provision, which raises concerns among suppliers about their potential financial exposure in the event of an incident.
• The structure of the liability law presents major challenges for foreign suppliers when securing insurance coverage. Many suppliers prefer a clear legal cap on liability to protect themselves against potential accidents. The open-ended liability and the possibility of substantial financial exposure discourage investment from companies like GE-Hitachi and Westinghouse, who are cautious about entering a market where liabilities may be unpredictable.
• India’s liability framework is seen as deviating from international norms, where typically all liabilities are assigned to operators, not suppliers. This difference complicates foreign involvement in India’s nuclear sector, making it harder to implement agreements like the Indo-US nuclear deal.
What steps are being taken to enhance Indo-US cooperation in the nuclear sector?
• Removal of Regulatory Barriers: The United States is taking final steps to ease restrictions that have previously obstructed nuclear collaboration since the 2005 agreement, paving the way for stronger partnerships between Indian entities and US private sector players.
• Facilitating Technology Transfer: These regulatory adjustments will facilitate the transfer of US nuclear technology to India, aiding India’s efforts to expand clean energy capacity.
• Strengthening the iCET Framework: Focus on enhancing the US-India Initiative on Critical and Emerging Technologies (iCET) to promote cooperation in nuclear technology and other advanced fields such as AI and quantum computing.
• Addressing Liability Concerns: Ongoing discussions aim to resolve concerns related to India’s nuclear liability laws, helping to attract foreign suppliers and boost investment in India’s nuclear energy sector.
Way forward:
• Policy Reforms for Liability Clarity: Amend India’s Civil Liability for Nuclear Damage Act to bring it in line with international standards, focusing liability solely on operators. This would reduce the financial risks for suppliers and encourage increased foreign investment.
• Promote Joint Ventures and Technology Transfer: Support joint manufacturing and research & development partnerships under the iCET framework, combining US expertise in light water reactor technology with India’s manufacturing strengths to achieve common clean energy objectives.
