Context

• The recent announcement in India’s Union Budget speech regarding potential amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act has sparked significant debate.
• While this move is likely to please the United States, where successive administrations have opposed liability for nuclear suppliers, it raises serious concerns for India’s nuclear safety.
• Any attempt to indemnify nuclear manufacturers from liability in case of an accident not only endangers public safety but also contradicts the principles of accountability and justice.

The Problem with Nuclear Supplier Indemnity (or Insurance)

• The core issue surrounding the proposed amendments is the removal of liability for nuclear suppliers.
• The reactors being pushed for purchase from the United States are extremely expensive and come with inherent risks.
• The 2011 Fukushima nuclear disaster serves as a stark reminder of the catastrophic consequences of nuclear accidents, which impact victims, plant operators, and suppliers alike.
• Historically, Indian law has upheld stringent liability norms for hazardous industries. After the Bhopal gas tragedy (1984), the Supreme Court established the principle of absolute liability, holding enterprises accountable for any harm caused.
• However, the 2010 Civil Liability for Nuclear Damage Act weakened this principle by channelling primary liability to the operator and capping compensation at ₹1,500 crore.
• Given that the economic damage from a nuclear disaster can reach thousands of times this amount, such a cap is grossly insufficient.
• The Fukushima cleanup costs, for instance, were estimated between ¥35 trillion and ¥80 trillion (₹20 lakh crore to ₹46 lakh crore).

A Key Protection in India’s Nuclear Liability Laws: The Right of Recourse

• Despite its flaws, India’s nuclear liability law includes a ‘right of recourse’ clause, which allows the operator to seek compensation from the supplier if an accident results from faulty equipment or substandard services.
• This provision, included due to civil society pressure, is crucial in holding suppliers accountable.
• In contrast, many Western liability regimes completely indemnify suppliers, largely due to the influence of powerful corporations rather than safety concerns.
• Evidence from past nuclear disasters reveals the role of design flaws in accidents. The Mark 1 containment design used in Fukushima was flagged as unsafe as early as 1972, yet the reactor’s designer, General Electric (GE), ignored these concerns.
• Similarly, after the Three Mile Island accident (1979), investigations found that the supplier, Babcock & Wilcox, had prior knowledge of potential hazards but failed to take corrective measures.
• When suppliers face no liability, they lack economic incentives to ensure reactor safety post-sale.

Fallacy of U.S. Reactor Imports

• Political Pressures and Corporate Influence
  • Nuclear suppliers have consistently resisted any liability obligations in India.
  • The United Progressive Alliance (UPA) government initially attempted to weaken the right of recourse, leading to criticism from political leaders, including Arun Jaitley.
  • However, after coming to power, the National Democratic Alliance (NDA) government adopted a similar stance, downplaying the right of recourse and suggesting that liability could be bypassed through contractual arrangements.
• Aggressive Lobbying by US to Amend India’s Nuclear Liability Law
  • The United States has actively lobbied for amendments to India’s nuclear liability law.
  • Eric Garcetti, the outgoing U.S. Ambassador to India, confirmed discussions with Indian political leaders to push for changes that favour U.S. nuclear suppliers.
  • The insistence on indemnity reflects fears that a future Indian government might increase the liability cap, exposing corporations to significant financial risks.
  • If supplier liability is enforced in India, it could also set a precedent in other countries, disrupting the established corporate protection enjoyed by U.S. nuclear firms.
• The Economic Concerns
  • Beyond liability concerns, the economic rationale for purchasing U.S. nuclear reactors is questionable.
  • The leading AP1000 reactor, manufactured by Westinghouse, has encountered severe cost overruns and construction delays.
  • In the U.S., two AP1000 reactors in South Carolina were abandoned after $9 billion had been spent, while two others in Georgia were completed at an astronomical cost of $36.8 billion, more than 250% over budget.
  • High construction costs translate to expensive electricity, making nuclear power uncompetitive against renewable sources.
  • A 2013 study in the Economic & Political Weekly showed that even with India’s lower labour costs, electricity from these reactors would remain disproportionately expensive.
  • The newer small modular reactor (SMR) designs, touted as a solution, suffer from the loss of economies of scale, making them even less viable.
• Hollow Safety Claims
  • The liability debate also exposes the contradictions in supplier safety claims.
  • Companies like Westinghouse argue that a radiation release from an AP1000 reactor would occur only once in 50 million years.
  • However, if the technology is so safe, why do these corporations insist on complete indemnity?
  • Their unwillingness to accept liability suggests they recognise the real risks of accidents, yet expect Indian citizens to bear those risks without adequate protection.

Conclusion

• India’s nuclear liability law is crucial for protecting public safety and ensuring accountability.
• Weakening supplier liability would not only endanger citizens but also shift financial burdens to taxpayers in the event of a nuclear disaster.
• The Indian government must resist external pressure and prioritise national interests over corporate profits.
• A strong nuclear liability framework is not just a legal necessity but a fundamental safeguard for the country’s future.