Japan to press for tweak in India's N-liability law

In 2010, Parliament passed the Civil Liability for Nuclear Damage Act

The exact dates of Prime Minister Narendra Modi’s visit to Japan are being firmed up — he is set to be in Tokyo in July — but on top of Japan’s business agenda is to seek a change in India’s civil nuclear liability law that will enable a partnership between India and Japan.

Japan has noted the reference in the President’s address to the joint session of the two Houses of Parliament: “International civil nuclear agreements will be operationalised and nuclear power projects for civilian purposes will be developed.”

Though the US civil nuclear power company, Westinghouse, which is now owned by Japanese major Toshiba, has signed a preliminary deal to set up a nuclear power plant in India, the problem lies in the way the liability clause is viewed by Japan.

THE JAPANESE MENU

Changes Japan wants in India’s civil nuclear liability law ...

• ... India to agree to more stringent inspection
• ... Termination clause, to discourage nuclear weapons testing
• ... To agree to not enrich or reprocess any fuel of Japanese origin

THE SORE POINT

• Civil Liability for Nuclear Damage Act passed in Parliament in 2010
• It says reactor operator and component suppliers to face unlimited legal liability in case of accidents
• India capped liability on foreign and domestic suppliers to Rs 1,500 crore, in Nov 2011; but N-power cost remains high
• Global nuclear energy majors want India to change the law

The Civil Liability for Nuclear Damage Act, which was passed in Parliament in 2010, says it’s not just the reactor operator but component suppliers would also face unlimited legal liability in the event of an accident. In November 2011, India announced rules capping the liability on suppliers, both foreign and domestic, to Rs 1,500 crore. However, even this increases insurance costs and makes the cost of power from nuclear energy quite prohibitive. All international nuclear energy majors — barring Russia — say India needs to further change the law, especially Sections 17(b) and 46 of the Act.

With Japan, this is not the only problem. Formal negotiations for a civil nuclear deal with Japan started in Tokyo in June 2010; these were followed by two consecutive rounds in October 2010 (Delhi) and November 2010 (Tokyo). However, India slowed the pace of negotiations in the wake of the Fukushima nuclear accident in March 2011. The last round of talks was held in November 2013.

Japanese energy companies are eagerly waiting a nuclear deal with India, as they see huge potential in helping India build nuclear plants. However, the Japanese government wants this deal only after India agrees to more stringent inspections than those required under India’s nuclear cooperation agreements with other countries. New Delhi has so far been reluctant to allow anything more intrusive than the inspections regime required by the Indo-US nuclear deal. India and Japan are also negotiating whether to include a termination clause in the pact, which would annul the agreement if either side were to conduct a nuclear weapons test. India has been resisting this clause. Also, Japan is insistent that India should agree not to enrich or reprocess any fuels of Japanese origin. Negotiations around these issues require deft footwork but all eyes are on the special relationship the new government in New Delhi has with Tokyo.