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Is it one step forward, two steps backward for India’s nuclear future?
As the controversial Kudankulam nuclear power plant hit an important milestone, becoming operational this week after years of protests, Moscow has refused to sign a deal to supply 2 more reactors to the plant owing to concerns regarding India’s nuclear liability law. This is further evidence of the difficulty India is facing in sealing civilian agreements not just with Russia, but a host of foreign partners because of the liability clauses in our nuclear damages bill.
The Indo-US nuclear accord inked in 2005, a year after UPA I was voted to power, is stuck in a limbo exactly for the same reasons that the Russians backed out. After clearing past many complex hurdles and sanctions, including domestic approvals in the US and clearances from agencies like the IAEA (International Atomic Energy Agency) and NSG (Nuclear Suppliers Group), India’s nuclear liability law that holds foreign reactor suppliers liable in the event of an accident, has caused a prolonged stalemate in negotiations with the US.
Is Russia’s refusal now, a further vindication of the belief that the liability law is putting India’s nuclear ambitions into jeopardy?
“If your liability regime has such cost implications, that things have come to a full stop, you have to take a decision – either convince suppliers and reach an agreement within the existing cost framework, or create more favorable conditions for them” Anil Kakodkar, the ex-head of the Atomic Energy Commission (AEC) told Business Standard.
But creating ‘favorable conditions’ seems easier said than done. The government ahead of the PM’s visit to Washington last month, tried to dilute the liability provision by citing the Attorney General’s opinion that it was up to the operator of a nuclear plant to decide whether or not it wished to exercise the ‘right to recourse’ provided under the bill’s section 17. But the move faced severe backlash from opposition parties, and had to be dropped summarily.
Also, the principal opposition, which is slowly gaining ground in opinion polls and could come to play an important role in the formation of the next government, is unlikely to budge to US pressure, having long nurtured suspicions about the nuclear deal. The BJP has consistently dismissed criticism from US vendors, lobby groups and think tanks who allege that India is deviating from the international practice with its clause on liability, and believes that it will not be a deterrent for foreign vendors wanting a share of India’s nuclear pie.
“There are at least four, if not, more suppliers eager to make supplies to India. The character of the bazaar is going to alter. It will be a market where suppliers chase buyers rather than otherwise. By introducing Section 17 (b). India is not deviating from the international practice. India is not acting contrary to the international mainstream. It is only protecting the interests of the operator i.e Government of India, or a government company. Korea has a similar provision.” Arun Jaitley, BJP leader argued in an op-ed in the Outlook Magazine recently.
But foreign vendors continue to nurture serious apprehensions about the Civil Liability for Nuclear Damage Act on issues like the extent of liability. Does it for instance, end with the vendor, or also include component manufacturers and suppliers of equipment and raw materials to the vendor, are some of the questions they are still grappling with. There is also uneasiness about Section 46 of the law which allows for tort claims to be filed, potentially exposing US companies to unlimited liability.
Amid such schisms, France, whose Areva is supplying reactors to the proposed Jaitapur atomic project seems to be the only country making some headway in India, with reports suggesting that the liability framework is not an obstacle for the French. But the bigger question is, what happens to the prized Indo-US relationship, premised patently on the landmark civilian nuclear agreement, if the liability deadlock isn’t resolved? The nuclear accord was seen as the crowning achievement of Manmohan Singh’s otherwise lackluster tenure as Prime Minister. With elections around the corner, an opposition that doesn’t share his enthusiasm on the deal and a strong anti-incumbency, there is very little time for him to salvage it.
