Deal with it

Contrived spectres on liability must not be allowed to imperil the Indo-US nuclear pact

The controversy reignited on the Civil Liability for Nuclear Damage Act, 2010, on the eve of Prime Minister Manmohan Singh's visit to the United States, rides on orchestrated fears. India is under pressure to dilute the provisions of the law, it is being said, so as to not apply the supplier's liability clause on US companies. In fact, the attorney general's opinion that is being cited to stoke these apprehensions was sought not on the "pre-early work" agreement between NPCIL and Westinghouse, but on the final negotiations for Kudankulam 3 and 4 with Russia. Negotiations with US companies have not reached that stage and liability will be addressed only in the main contract. This opinion was sought earlier and has only been reaffirmed now.

As per the liability law, it is up to the operator, NPCIL, to exercise the right to recourse in case of a nuclear mishap, if that right is written into the contract. Critics of the Indo-US nuclear deal are playing on fears that NPCIL, a PSU, may be compelled by the government not to invoke it. India signed the Convention for Supplementary Compensation (CSC) in 2010. Yet, in violating international regulations that fix liability solely on the operator, the liability law is not consistent with the CSC. The point is, the nuclear liability law is problematic not because it "shields" suppliers, but because it makes it difficult for companies from the US, France, Russia and elsewhere to invest in India's nuclear sector.

The global nuclear industry was revived with the assurance that the state would bear liability, as it does in all major nuclear-power countries. Suppliers will not operate without this protection, which India's liability law fails to provide. Instead, it may see suppliers apply for large insurance covers that are certain to find their way into the pricing. Making nuclear power unaffordably expensive through a large supplier liability will effectively kill the nuclear deal. After the political effort the UPA invested in lifting the international technological blockade on India's nuclear sector, it allowed itself to be cornered into passing a bad piece of legislation. The window of opportunity is now at its narrowest. The government needs to urgently design solutions to the liability problem so as to ensure the entry of foreign suppliers.

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