Nuclear supplier nations not happy with India’s Liability Law

The nuclear ‘breakthrough’ is mostly hype: http://economictimes.indiatimes.com/news/politics-and-nation/the-nuclear-breakthrough-is-mostly-hype-swaminathan-sa-aiyar/articleshow/46162264.cms Swaminathan SA Aiyar 8 Feb, 2015 ndian officials say the Obama visit broke a seven-year logjam in nuclear cooperation, opening the way for US firms to set up nuclear power plants in India.

However, in Washington there is no jubilation, much caution, and some plain scepticism. Hope springs eternal, but the logjam has not yet been broken.

The Modi-Obama meeting whipped up a lot of fizz and optimism. Problem: the key issue is not political at all but commercial. The entities that must be convinced are not US presidents but heads of nuclear corporations like GE and Toshiba-Westinghouse. And no corporation so far is convinced that India’s nuclear liability law has ceased to be a hurdle.

Media reports seemed to suggest some specific deal for US suppliers. Actually, nuclear liability is relevant for equipment suppliers from not just the US but Japan, France and Russia too.

All have voiced strong reservations about India’s liability law, and none has so far been convinced by Indian offers of insurance cover, which are roughly the same as those offered to Obama. Politicians and diplomats like to present every summit as a huge success, but that’s often hype. In 2010, Parliament passed a nuclear liability law empowering victims of any future nuclear accident to sue foreign suppliers for unlimited sums. This huge potential liability has stalled any firm contracts despite extensive talks for five years.

Suppliers want India to conform to the standard international practice, placing the liability of any accident on the plant operator — the Nuclear Power Corporation of India — and not equipment suppliers. Without liability caps, suppliers say it’s too risky to sell equipment to India. Moscow took the risk in Soviet times, when the state owned all suppliers, but today even Russia seeks a liability cap. China has agreed to place the liability on its own nuclear operator, , and so global equipment suppliers are helping it build a string of nuclear power plants.

But Indian memories of the Union Carbide disaster at Bhopal remain so vivid that Parliament insisted on unlimited liability for suppliers. This has stalled all deals.

What exactly is the supposed breakthrough in Indo-US nuclear relations? The Washington Post quotes a US official saying the supposed breakthrough “is not a signed piece of paper, but a process that led us to a better understanding of how we might move forward.” Translation: lots of good intentions but no hard legal document that can end US corporate fears.
An Indo-US agreement was indeed reached on a completely separate issue — tracking the movement of US nuclear materials to ensure India did not divert these to military use. This was an additional roadblock in case of the US. But overcoming this does not settle the much bigger roadblock — unlimited liability — that all four supplier nations are complaining about.