India business wary over nuclear law

India’s lower house of parliament on Wednesday approved a draft nuclear liability law that the national nuclear power company and Indian business groups fear will jeopardise the benefits of New Delhi’s nuclear deal with the US.

The state-owned Nuclear Power Corp of India and leading industry bodies warned the draft law would throttle the country’s fledgling nuclear power industry, by deterring private companies from providing nuclear equipment or raw materials to India.

Global nuclear companies such as GE, Westinghouse, Bechtel and Areva are keen to enter the Indian market because of New Delhi’s ambitious plans to expand its nuclear energy capacity from 4,000 megawatts of installed capacity to 30,000MW by 2020. These companies have been waiting for India to lay out its legal framework for liability – the final step of India’s 2008 civil nuclear deal with the US.

The draft law is intended to ensure quick compensation for victims of nuclear accidents without the need to prove fault.

However, Indian industry groups say a provision allowing nuclear power plant operators to seek recourse from equipment or raw material suppliers for 80 years after a plant’s construction would deter international nuclear energy companies and some local companies from doing nuclear commerce with India.

In a letter to Manmohan Singh, prime minister, the Federation of Indian Chambers of Commerce and Industry warned the legislation “threatens to completely undo the government’s efforts to accelerate nuclear power generation in our country”.

The Confederation of Indian Industry said separately that the provision would be “a major deterrent” to India’s nuclear power operators accessing foreign technology.

“No manufacturer, Indian or foreign, would be able to serve the nuclear power industry,” Sudhinder Thakur, executive director of the national nuclear power group, said this week.

“The government has the powers to make laws, but in making laws, we should not defeat the purpose for which the laws are made.”

Mr Singh defended the bill – which must still be approved by the upper house – saying it was the final step to end India’s decades-long status as a nuclear pariah, following its 1974 and 1998 nuclear weapons tests.

“This bill completes our journey to end the nuclear apartheid that the world imposed on us,” Mr Singh told parliament ahead of the vote.

Most countries with a large nuclear energy sector fix absolute and exclusive liability on nuclear power plant operators, which are normally able to access insurance to cover their risk. With up to 300 companies supplying components, materials, and services to build a nuclear power plant, industry groups say pinpointing liability in case of an accident is considered nearly impossible – and many suppliers, especially of small parts, could not afford to insure against a long accident risk.

However, the debate on the nuclear liability bill was affected by the recent resurgence of public anger over the 1984 Bhopal gas disaster.