Amidst all the brouhaha surrounding United States President Barack Obama’s visit to New Delhi for the Republic Day parade, negotiations surrounding the implementation of the Indo-US nuclear deal have taken a worrying turn. US negotiators have been trying to prevail upon their Indian counterparts to dilute the nuclear liability law that holds suppliers directly liable, in case of a nuclear accident. Under global norms, the primary liability lies with the operator. Since all nuclear power plants in the country are run by government-owned Nuclear Power Corporation of India Ltd (NPCIL), under global norms, the Government of India would have to pay for damages in case of an accident.
However, under the 2010 Indian nuclear liability law, which was passed by both houses of Parliament, equipment suppliers are ultimately responsible for paying damages in case of an accident. This piece of legislation, many commentators believe, has held back American firms like Westinghouse Electric Company and GE-Hitachi from proceeding with the construction of reactors. To find a way around the liability clause, New Delhi has offered to set up an insurance pool to compensate companies that have won the right to construct reactors.
The plan laid out by state run General Insurance Company of India (GIC Re) posits that insurance would be bought by foreign companies contracted to build nuclear reactors in India. These foreign companies, however, would then recoup the cost of the premium paid to GIC Re by charging a higher amount to its consumers in India. Alternatively, NPCIL could take out insurance on behalf of these companies. In other words, New Delhi may have found ways to circumvent the nuclear liability law, by inadvertently shifting the burden of a nuclear accident onto our national exchequer. Despite these fears, both sets of negotiators from New Delhi and Washington are yet to agree upon anything concrete.
Another point of contention is Washington’s insistence on monitoring the use of any material or equipment in a US-made reactor, even if it is sourced from a third country. For all intensive purposes, this administrative arrangement does impinge on our nuclear sovereignty. In line with standard global practice, India has only agreed to inspections only by the International Atomic Energy Agency (IAEA). Delegates from New Delhi cited the example of India’s nuclear deal with Canada, which was stalled after the latter insisted on a similar condition. Canadian Prime Minister Steven Harper, however, finally agreed to inspections by IAEA because he recognised India’s commitment to nuclear-non-proliferation. A final call on the matter will be taken by US President Barack Obama and Indian Prime Minister Narendra Modi. The nation will anxiously wait for the final outcome.