Why in news?
During renewed trade negotiations in New York, Commerce Minister Piyush Goyal highlighted India’s energy security vision, which will involve strong collaboration with the United States, especially in small modular reactor (SMR) technologies and broader nuclear energy cooperation.
However, progress faces hurdles due to unresolved legal issues, particularly India’s nuclear liability framework, which has long discouraged US firms from entering the Indian nuclear market. Addressing these liability concerns is essential but remains a complex challenge, making expansion in nuclear cooperation easier said than done.
What’s in Today’s Article?
- US Regulatory Clearance Boosts Indo-US Nuclear Prospects
- Key Amendments to India’s Nuclear Liability Framework
- Opening India’s Nuclear Sector to Private Participation
- Aligning India’s Nuclear Laws with Global Norms
- Conclusion
US Regulatory Clearance Boosts Indo-US Nuclear Prospects
- In March, the US Department of Energy (DoE) granted Holtec International regulatory clearance under the restrictive 10CFR810 rule, a long-standing hurdle in Indo-US nuclear cooperation.
- The approval conditionally permits Holtec to transfer unclassified small modular reactor (SMR) technology to its subsidiary Holtec Asia, as well as Indian firms Tata Consulting Engineers and Larsen & Toubro.
- Previously, 10CFR810 regulations barred US companies from manufacturing nuclear equipment or conducting nuclear design work in India, blocking New Delhi’s aim to co-produce SMRs for domestic needs.
- The clearance removes this roadblock, paving the way for collaboration.
- Now, the onus shifts to India, which must pass pending legislative amendments — particularly to its liability law and the Atomic Energy Act — to unlock foreign investment.
Key Amendments to India’s Nuclear Liability Framework
- India is working on a set of 11 amendments to its Civil Liability for Nuclear Damage Act, 2010 (CLNDA) to attract foreign investment and ease vendor concerns.
- Section 17(b) – The Main Obstacle
- Section 17 of CLNDA allows nuclear plant operators to seek compensation from suppliers after paying damages for an accident.
- Specifically, Section 17(b) gives operators a “right of recourse” if an incident results from defective or substandard equipment supplied.
- Foreign vendors like Westinghouse Electric (US) and Framatome (France) argue this provision is stricter than global norms, exposing them to unlimited liability.
- Since its enactment, no foreign company has invested in India’s nuclear projects, fearing financial risks.
- Even domestic sub-suppliers like L&T and Walchandnagar Industries are wary, as the term “supplier” is too broad and could include small vendors.
- Proposed Amendments
- The government is considering:
- Diluting Section 17(b) to bring it in line with international nuclear liability laws.
- Clarifying the definition of “supplier” to exclude sub-suppliers from automatic liability.
- Capping vendor liability, both in monetary terms (limited to contract value) and by time frame, so risks do not extend indefinitely.
- Regulatory Safeguards
- Officials note that the Atomic Energy Regulatory Board (AERB) already vets all projects and can ensure right of recourse is explicitly written into contracts.
- This safeguard could balance accountability while easing investor fears.
Opening India’s Nuclear Sector to Private Participation
- India is preparing sweeping reforms to allow private and potentially foreign companies to participate in nuclear power generation — a sector long reserved for state-owned operators.
- Amendment to the Atomic Energy Act, 1962
- The government plans to amend the Atomic Energy Act, 1962, which currently restricts nuclear plant operations to public sector entities like NPCIL and NTPC Ltd.
- The proposed reform would:
- Enable private firms to enter nuclear power generation.
- Allow for minority equity stakes by foreign companies in upcoming nuclear projects at a later stage.
- Expand the sector’s capacity by leveraging private investment and technology.
- Link to Indo-US Civil Nuclear Deal
- Nearly two decades after the Indo-US civil nuclear agreement, these reforms are seen as crucial to unlocking its commercial potential.
- New Delhi also hopes to present this move as part of its broader trade and investment partnership with Washington, complementing ongoing India–US trade negotiations.
Aligning India’s Nuclear Laws with Global Norms
- India is moving to amend its Civil Liability for Nuclear Damage Act (CLNDA) to align more closely with the 1997 Convention on Supplementary Compensation for Nuclear Damage (CSC).
- These changes are aimed at easing investor concerns, clarifying ambiguities, and bringing India fully into the global nuclear liability regime.
- Compliance with the CSC
- India signed the CSC in 2010 and ratified it in 2016, despite not being a member of the Vienna (1963) or Paris (1960) Conventions.
- The proposed amendments to CLNDA will:
- Harmonise India’s framework with CSC provisions and annexures.
- Strengthen India’s standing as a CSC-compliant state party, ensuring compatibility with international liability norms.
- Clarification of “Supplier”
- A major issue has been ambiguity in the definition of “supplier” under Rule 24 of CLND Rules. The rules state a supplier may include:
- A manufacturer providing systems, equipment, or structures.
- A vendor responsible for design and quality assurance.
- Providers of quality assurance or design services.
- However, uncertainty remains on whether this applies only to reactor suppliers like Westinghouse or also to small vendors, such as an electrical package provider in a Rs 1 crore contract.
- The amendments seek to clearly define supplier responsibilities, easing fears of unlimited liability for smaller sub-vendors.
Conclusion
- These amendments are an economic necessity to attract foreign and domestic investment into India’s nuclear sector.
- Still, the biggest challenge will be forging political consensus in Parliament to pass the reforms, which may now be delayed beyond the monsoon session.
