New Delhi: India is preparing to amend its nuclear liability laws to limit accident-related penalties for equipment suppliers, aiming to encourage participation from U.S. companies that have so far stayed away due to fears of unlimited legal exposure.
The move, initiated by Prime Minister Narendra Modi’s government, is part of a broader strategy to scale up the country’s nuclear power generation capacity twelvefold to 100 gigawatts by 2047. It is also expected to strengthen India’s position in ongoing trade and tariff negotiations with the United States.
Key Change in the Law
A draft bill from the Department of Atomic Energy proposes removing a critical clause from the 2010 Civil Liability for Nuclear Damage Act that currently exposes suppliers to unlimited liability in the event of a nuclear accident. According to three government sources, the revised law would cap the compensation that plant operators can claim from suppliers to the value of their contract, and only within a time period specified in that contract.
At present, the law does not define any upper limit on the compensation or the duration for which a supplier can be held liable—an issue that has deterred major firms like General Electric and Westinghouse Electric from entering the Indian nuclear market.
Origin in Bhopal Disaster
India’s strict liability law was originally inspired by the 1984 Bhopal gas tragedy—the world’s worst industrial disaster—when over 5,000 people died following a toxic gas leak at a plant operated by U.S.-based Union Carbide Corp. The company later settled for $470 million in damages in 1989. The legacy of that disaster led to India drafting a tough nuclear liability regime to prevent similar outcomes.
However, this law has also kept many Western firms out of India’s booming energy market and complicated nuclear cooperation efforts with the U.S., especially after their 2008 civil nuclear deal.
Aligned with Global Norms
The proposed changes are intended to align India’s policy with international norms, which place the responsibility for safety and liability on the plant operator rather than the reactor supplier.
“India needs nuclear power, which is clean and essential,” said Debasish Mishra, Chief Growth Officer at Deloitte South Asia. “A liability cap will allay the major concern of nuclear suppliers.”
Encouraging Domestic Investment
India also plans to allow private domestic firms to participate in nuclear power generation—a first in the sector. Leading Indian conglomerates such as Reliance Industries, Tata Power, Adani Power, and Vedanta have held discussions with the government about potential investments of around $5.14 billion each.
The draft bill proposes a lower liability cap of $58 million for small reactor operators, while maintaining the current $175 million cap for larger operators.
Approval Expected in July
According to sources, the Modi government is confident that the proposed amendments will be approved during the upcoming monsoon session of Parliament, which begins in July. Analysts say the law’s passage is critical for India-U.S. trade talks, with the goal of increasing bilateral trade from $191 billion in 2023 to $500 billion by 2030.
