Should India Amend its Nuclear Energy Laws?

General Studies Paper -3

Context: Discussions are ongoing in India to amend the nuclear liability framework, regulated by the Civil Liability for Nuclear Damages Act (CLNDA), 2010, and the Atomic Energy Act (AEA), 1962.

• It aims to allow private companies to build and operate nuclear energy-generation facilities.

About

• India’s clean energy transition goals and net-zero commitments necessitate ramping up non-fossil energy, including nuclear.
• The Civil Liability for Nuclear Damage Act, 2010 (CLNDA) assigns liability to suppliers, deterring foreign investment.
• The debate hinges on whether amending this law is necessary or whether the obstacles are deeper and more structural.

Legal Reforms Underway

• Easing Nuclear Liability Law (Civil Liability for Nuclear Damage Act, 2010): Its objective is to limit the liability of equipment vendors in case of a nuclear accident. Key Proposed Changes:
• Monetary Cap: Liability may be capped to the original contract value.
• Time Limit: Introduce a statute of limitations for how long liability applies.
• Amendment to the Atomic Energy Act, 1962: Its objective is to allow private and foreign players to enter nuclear power generation.
  • Current Restriction: Only state-owned entities like NPCIL and NTPC Ltd can operate nuclear plants.
  • Proposed Change: Permit minority equity participation by foreign/private entities in upcoming projects.

Arguments for Amending India’s Nuclear Laws

• Legal Impediment to Foreign Investment: CLNDA creates supplier liability, which is a global anomaly.
  • Companies from the U.S., France, Japan, and even Russia (post-2010) avoid entering the Indian market.
• Supply Chain & Technology Access: Without foreign suppliers, India can’t reach 100 GW due to domestic industrial capacity limits.
  • Amending the law is necessary for technology access, especially with SMRs (Small Modular Reactors), a promising frontier.
• International Precedents – CSC Framework: India is part of the Convention on Supplementary Compensation (CSC), which emphasizes operator liability, not supplier liability.
  • SMRs and other new technologies should be encouraged via an investor-friendly legal framework.

Arguments Against Amending the Law:

• Misdiagnosing the Real Problem: The issue isn’t primarily legal or investment-related; it’s technological, economic, and political.
  • Expansion assumptions (to 100 GW) are unrealistic; even advanced economies like the U.S. and France have not grown at that pace.
• No Guarantees of Technology Transfer: Experience in defence shows no meaningful tech transfer despite 100% FDI.
  • SMRs are untested at scale; investment and transfer are unlikely without guaranteed returns, which India cannot ensure.
• Over-reliance on Hypotheticals: Policy cannot be made on the assumption that private companies will change behaviour once the law is amended.
  • India’s plan to build five small reactors domestically shows it may be more realistic to scale indigenous designs.
• Sovereignty and Public Safety: Diluting supplier liability may reduce accountability and compromise public interest.
  • India’s unique liability regime was created in the wake of Bhopal and Chernobyl experiences; it’s rooted in justice and deterrence.

Way Ahead

• India’s push to expand nuclear energy to meet its clean energy targets by 2047 faces a key legal obstacle in its liability law.
• While some argue that amending the law is essential to attract foreign investment and technology, others caution that the real issues lie in economic viability, safety, and over-reliance on foreign participation.
• A balanced path may involve nurturing indigenous capabilities, selectively opening up to foreign participation under tight regulatory frameworks, and ensuring public safety is not compromised.