Industry asks government to clarify on nuclear liability

On the day India signed a civil nuclear agreement with Sri Lanka, Indian industry Monday sought clarity on the country's nuclear liability law that has been "hindering the future of nuclear commerce".

"While industry welcomes the clarifications put forward by the Ministry of External Affairs with respect to certain issues that were hindering the future of nuclear commerce due to existing nuclear liability framework, there still remain some unanswered questions on which industry would require to have a comfort level," Jyotsna Suri, president of industry chamber FICCI, said in a statement here.

"Greater clarity is required vis-à-vis the definition of supplier in the context of domestic entities which are engaged in contract manufacturing for the Nuclear Power Corp (state-run), as per their design and specification, especially for the domestic nuclear programme," she added.

Through a set of frequently asked questions (FAQs) released last week, signalling a possible breakthrough on nuclear cooperation with the US, the government sought to reassure nuclear suppliers also from other countries who have been quite sceptical about the implications of India's nuclear liability law.

One FAQ issued by the external affairs ministry explains that the law "permits but doesn't require an operator to make the supplier liable in its contract for a nuclear reactor or part".

Another answer says that a supplier can be sued for damages only "if it is expressly provided for in a contract in writing".

"The contentious issues that still remain are uncertainties arising out of interpretation of Section 17, Section 46 of the Civil Liability for Nuclear Damage Act (CLNDA) of 2010," FICCI said.

The ministry release has now eased the way for foreign suppliers by doing away with the right of recourse of a victim to sue the supplier in India directly as well as in a "class action suit" in foreign courts. Section 46 on tort law "does not create the grounds for victims to move foreign courts," the MEA said.

The CLNDA empowers victims of any future nuclear accident to sue foreign suppliers for huge potential liability, which is holding back companies from doing business with India.

The operator, in this case the state-run Nuclear Power Corp (NPCIL), is required to take out an insurance policy covering its liability, but the law also allows the operator the right to recourse on the supplier.

"Industry would also like to understand the tenability of the clarifications provided by MEA FAQs as well as the future contracts between NPCIL and industry in a court of law in the event of a nuclear accident," FICCI said.

"The nuclear manufacturing industry would also require a clarification from NPCIL and DAE that this risk would be adequately covered through the Nuclear Insurance Fund," it added.

On the India Nuclear Insurance Pool, the MEA said it is "a risk transfer mechanism formed by GIC and four other public sector undertakings who will together contribute a capacity of Rs.750 crore out of a total of Rs.1,500 crore". The balance would be contributed by the government.

Residual damages would be borne by the 1997 International Convention on Supplementary Compensation for Nuclear Damage fund, which India has said it intends to ratify.