Should India amend its nuclear energy laws?

 

1. India currently has an installed nuclear power capacity of approximately 8.88 gigawatts (GW).

• Nuclear power capacity is the total amount of electricity a country can generate from nuclear reactors, measured in gigawatts (GW).

2. The government has set an ambitious target to increase this capacity to 100 GW by 2047.
3. This plan aligns with India’s broader commitment to achieve net-zero carbon emissions by 2070.

• Net-zero carbon emissions is a state where a country emits no more carbon dioxide than it can absorb through forests or carbon capture.

4. To meet this target, India is undertaking major steps to reform its nuclear policy and legal framework.

Government Steps for Nuclear Energy Expansion in India

1. India aims to expand its nuclear capacity from 8.88 GW to 100 GW by 2047 as part of its net-zero goals.
2. To achieve this, the government is amending the Atomic Energy Act (AEA), 1962 and Civil Liability for Nuclear Damages Act (CLNDA) 2010 to allow private participation and reduce supplier liability.

• AEA,1962: The main law giving exclusive rights to the central government to operate nuclear power plants.
• CLNDA2010: A law that defines who is responsible for damages in case of a nuclear accident.

3. It has launched a ₹20,000 crore Nuclear Energy Mission (NEM) focusing on indigenous Small Modular Reactors (SMRs).

• SMRs are compact nuclear reactors designed to be factory-built, safer, and faster to deploy than traditional large nuclear plants.

4. Public-Private Partnerships (PPP), financial incentives like Viability Gap Funding (VGF), and regulatory reforms are being introduced to attract both domestic and foreign investment.

 

Evolution and Problems with India’s Nuclear Liability Law

1. Why a Liability Law Was Needed

1. In the 1960s, India began building nuclear reactors, but had no clear law on liability in case of nuclear accidents.
2. The 1984 Bhopal Gas Tragedy  highlighted the urgent need for a legal liability framework in high-risk sectors.
3. After the 2008 U.S.–India Civil Nuclear Deal, India began importing nuclear technology, making a strong liability law essential to protect citizens and attract investment.

2. Key Milestones in Legal Evolution

a. Atomic Energy Act (AEA), 1962

• Gave the central government total control over nuclear power generation.
• Did not define liability, compensation, or responsibility of the operator or supplier.

b. India–U.S. Civil Nuclear Agreement (2008)

• India received a waiver from the Nuclear Suppliers Group (NSG), allowing it to engage in nuclear trade.
• Opened doors for foreign investment and technology transfer.
• Foreign suppliers expected India to align with global norms of liability (like CSC) to reduce investment risk.

c. Civil Liability for Nuclear Damage Act (CLNDA), 2010

• Enacted in response to international expectations and public safety needs.
• Key provisions:
  • The operator is primarily liable for nuclear damage.
  • Operator can seek recourse from suppliers if:
    • Damage is due to defective equipment/material, or
    • The contract explicitly allows it.
  • Operator’s liability is capped at ₹1,500 crore; the government pays beyond this.
  • Established a claims commission and compensation procedure.
• India delayed ratifying the Convention on Supplementary Compensation (CSC) until 2016 due to domestic political concerns.

3. Problems with India’s Nuclear Liability Law

a. Supplier Liability Is Unusual and Risky

• Global practice under CSC channels all liability to the operator only.
• India’s law is unique in allowing supplier liability, increasing supplier risk.
• This makes foreign firms reluctant to enter India’s nuclear sector.

b. Violates Global Contract Norms

• International suppliers prefer indemnity clauses in contracts to avoid liability.
• Indian law restricts such waivers, making contracts incompatible with international standards.

 c. Foreign Participation Has Declined

• Major suppliers like Westinghouse (U.S.), Areva (France), and Rosatom (Russia) have refused to engage under the current rules.
• Rosatom only participated under a 2008 pre-CLNDA deal for Kudankulam.
• After CLNDA, no new foreign supplier has signed on under the existing liability framework.

 d. Domestic Industry Is Also Affected

• Indian private suppliers fear litigation under CLNDA and have refused to supply components.
• In the Kovvada project, vendors backed out citing legal risks.
• NPCIL had to take full contractual blame, even when the components were made by others.
• This workaround is considered legally weak and remains untested in Indian courts.

 e. Increases Investment Risk and Uncertainty

• Legal ambiguity leads to higher insurance costs and project delays.
• It reduces India’s ability to attract both domestic and foreign investment in the nuclear sector.

 f. Law Is Untested in Practice

• There has been no nuclear accident in India to test how CLNDA functions.
• As a result, the law remains unproven in real-world scenarios, creating ongoing uncertainty.

Why Nuclear Liability Matters?

1. In the event of a nuclear accident, there can be loss of life, severe health impacts, and property damage.
2. A nuclear liability framework is necessary to ensure legal, financial, and moral accountability.
3. Such a law protects not just victims, but also operators, the government, and investors.
4. It ensures that victims receive fair and timely compensation without long legal battles.
5. The law clearly defines who is responsible (usually the operator) and under what conditions.
6. It helps avoid legal confusion in accidents involving government bodies, private players, or foreign suppliers.
7. Knowing they are liable, operators and suppliers are encouraged to adopt stronger safety measures.
8. A clear liability regime is often a precondition for foreign companies before investing in nuclear projects.
9. If liability rules are too vague or too harsh, investors may avoid the Indian nuclear sector altogether.

What Legal Changes Are Being Proposed?

1. To encourage investment and meet the 100 GW target, India is amending these two laws.
2. The Atomic Energy Act is being amended to allow private companies to build and operate nuclear power plants.
3. The CLNDA is being modified to reduce supplier liability during nuclear accidents.
4. These changes are crucial because the current law assigns full liability to suppliers, which has discouraged both foreign and domestic participation.
5. The government plans to achieve 50% of the 100 GW target through Public-Private Partnerships (PPP).
6. A ₹20,000 crore Nuclear Energy Mission has been launched to support new developments.
7. The mission focuses on Small Modular Reactors (SMRs), which are smaller, safer, and easier to build.
8. India plans to build five indigenous SMRs by 2033, using local technology and manpower.
9. Indian industries are being invited to set up 220 MW Bharat Small Reactors (BSRs) for their own energy use.
10. NPCIL (Nuclear Power Corporation of India Ltd.) has already released tenders for these projects.

Why These Reforms Are Considered Necessary

1. After the 2008 NSG waiver, foreign firms showed interest in India’s nuclear sector.
2. However, they withdrew when the CLNDA made suppliers fully liable for accidents.
3. Foreign companies from France, Japan, and the U.S. have said they will not enter the Indian market unless the law is changed.
4. Even Russia’s Rosatom, a state-owned company, refused to accept the CLNDA.
5. In 2008, India gave Rosatom a contractual indemnity, but this is no longer legally allowed post-CLNDA.
6. The CLNDA also impacted Indian companies. In the Kovvada project, domestic suppliers refused to participate.
7. NPCIL had to sign contracts taking full responsibility even if the components were made by suppliers.
8. This workaround is considered legally weak and has never been tested in court.
9. Supporters of the reform argue that if long-term demand is assured, Western suppliers will increase capacity to serve the Indian market.
10. Some also argue that newer SMR companies are more open to technology transfer than old firms.

Global Liability Practices: The CSC Model

1. The Convention on Supplementary Compensation (CSC) provides a global liability model India can follow.
2. CSC has three key principles:
   1. Liability rests only with the operator
   2. A 3-tier compensation fund is created in advance
   3. Suppliers are liable only in case of contracts or willful misconduct
3. This system ensures quick compensation without dragging suppliers into court battles.
4. CSC assumes a neutral regulatory authority will review safety before approval.
5. The host country (India) remains the final guarantor of public safety.

Limitations and Counter-Arguments to the Reform

1. Critics argue that legal reform alone will not solve India’s nuclear challenges.
2. The real bottlenecks lie in limited domestic capacity, financing issues, and slow timelines.
3. Globally, nuclear power growth is stagnant in countries like the U.S., France, UK, and Japan.
4. Only China is expanding nuclear power significantly, and Chinese firms are unlikely to invest in India.
5. India has tried to get foreign investment and technology in defence by raising FDI limits, yet no major transfer has occurred.
6. This suggests that tech transfer doesn’t follow policy changes automatically—it depends on profitability.
7. The idea that SMRs will transform India’s nuclear sector is seen as too optimistic.
8. India currently does not possess SMR technology, and there is no strong evidence that it will work well in Indian conditions.
9. India’s budget allocation is for five small reactors based on familiar PHWR technology, not advanced foreign SMRs.
10. Even if SMRs are available, capital costs remain high, and their mass production model is still unproven.
11. Without solving the finance and scale-up challenge, legal changes may not lead to desired results.
12. Many arguments in favour of reform are based on hypothetical outcomes, not actual historical experience.
13. India has liberalized sensitive sectors before, but transformations in investment or technology haven’t followed.
14. There’s no concrete reason to assume nuclear power will be different.
15. Critics suggest India should focus on realistic targets, proven domestic technology, and building investor confidence instead of relying too heavily on legal changes.